Market Update: Thursday, September 6, 2018


Daily Insights

  • New LPL Market Signals Podcast: S&P 500 sector switcheroo. Listen to Senior Market Strategist Ryan Detrick and Equity Strategist & Portfolio Manager Jeffrey Buchbinder discuss why the upcoming changes to the S&P 500 Index sectors are very important and how they could impact your investments. Please join our discussion on social via #LPLMarketSignals, and check the LPL Research blog later today for additional insights on one of the most significant makeovers of the S&P GICS sectors in history.

  • Nafta talks continue. Two sticking points remain as negotiators from the U.S. and Canada continue to work on a trade agreement, including maintaining some form of anti-dumping dispute panel and carving out exemptions for culturally important industries. We believe a NAFTA deal likely gets done-if not this week, then soon thereafter-and may give a slight short-term boost to investor sentiment. However, China remains the market’s primary focus, as tariffs on another $200 billion of Chinese goods are likely to be enacted within the next 24 hours, with Beijing set to retaliate. While we believe the U.S. and China will also eventually reach an agreement, it’s difficult to see that happening before the midterm elections.

  • Global manufacturing holds steady. Purchasing managers’ index (PMI) data from provider Markit pointed to steady global manufacturing growth in August, though momentum slowed a bit from the second quarter pace. The global reading dipped to 52.5 in August from 52.8 in July, with U.S. and Europe outperforming both China and Japan. New export order trends have stabilized, with the exception of the U.K. The latest readings are consistent with ~4% annualized growth in global gross domestic product, according to Capital Economics, slightly better than LPL Research’s forecasts of 3.8% in our the Midyear Outlook 2018.*

  • Some good news from Italy? Reports that the Italian government-specifically the League Party-would stay within European Union budget rules with its spending plans sent a reassuring message to European banks holding Italian bonds. Positive developments on that front could help the financials-heavy European equity markets stabilize and lower the “wall of worry” global investors are facing. In our view, we continue to favor U.S. equities over Europe among developed markets for the superior economic and profit growth outlook and our ongoing structural concerns in the Eurozone.

  • ADP employment data misses estimates. Today’s ADP employment report showed that U.S. companies added 163K jobs in August, below consensus estimates of 200K, and signals that job growth in tomorrow’s August nonfarm payrolls report could be weaker than the forecasted 198K increase. A separate report showed applications for unemployment benefits fell to 203K last week, bringing the three-week average for jobless claims down to its lowest point since 1969. While lower-than-expected payrolls growth may sound worrisome, we expect slowing jobs growth at this point in the recovery as the labor market moves closer to full employment, and we remain encouraged by declining jobless claims.


Click Here for our detailed Weekly Economic Calendar


  • ADP Employment Report (Aug)
  • Initial Jobless Claims (Sep 1)
  • ISM Non-Manufacturing Index (Aug)
  • Factory Orders (Jul)
  • Durable Goods Orders (Jul)
  • China Foreign Reserves (Aug)


  • Nonfarm Payrolls Report (Aug)
  • Unemlpoyment Rate (Aug)
  • Eurozone GDP Report (Q2)
  • China Trade Report (Aug)


*Additional descriptions and disclosure are available in the Midyear Outlook 2018: The Plot Thickens publication

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

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All company names noted herein are for educational purposes only and not an indication of trading intent or a solitication of their products or services. LPL Financial doesn’t provide research on individual equities.

All performance referenced is historical and is no guarantee of future results.

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Index data obtained via FactSet


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