S&P 500 gives resistance another try. With the S&P 500 Index’s move higher this morning, it appears to finally be taking out the key resistance level around 2817 that has plagued it for the past several months. A close near these levels would mark the highest point since before October 10, the day of the 3.3% plunge that arguably kicked off the larger sell-off. We continue to believe that the index can move back to all-time highs in 2019, and favor large-caps over small-caps at this stage in the business cycle. After outperforming the S&P 500 to start 2019, the Russell 2000 has given back much of the relative outperformance since the end of February.
Trump-Xi meeting delayed, but optimism persists. China’s state media reported “concrete progress” on the text of their trade agreement after Vice Premier Lui held a call with U.S. Trade Representative Lighthizer and Treasury Secretary Mnuchin on Thursday. Though further details were not disclosed, President Trump yesterday said that whether a trade deal can be reached would likely be known in the next three to four weeks. Also, additional comments from China’s Vice Premier suggested further stimulus measures could (and would) be implemented to ease the strain on businesses and consumers amid continued deceleration in the world’s second largest economy. The confluence of news helped the Shanghai Composite Index rebound from last week’s drop, its only weekly decline this year.
Brexit…the song that never ends. After two years of debate, the U.K. needs more time to find consensus on the best terms for its pending divorce with the European Union after parliament voted yesterday to extend the deadline by ~2 months. Though expected, the time frame is relatively short; however, the questions now is: What do lawmakers believe they can accomplish in that relatively short period of time that they hadn’t done in the past two years? Government officials intend to spell out those steps on Monday, but Prime Minister Theresa May already indicated she would let Parliament take control of the process next week if she fails to get a majority in what will be the third round of voting on her third iteration of a Brexit deal. (More insights on recent Brexit developments)
ICYMI: Outlook 2019 video. In case you missed it (ICYMI), the Outlook 2019 video is a great way to provide a 2-minute update on LPL Research’s views on the market and economy. Chief Investment Strategist John Lynch has been on the road sharing guidance for the year ahead, most recently at the LPL Master’s Conference, which we’ll highlight later today on the LPL Research blog.
- Industrial Production (MoM Feb)
- JOLTS Job Openings Report (Jan)
- University of Michigan Sentiment Index (Preliminary Mar)
- Eurozone CPI Report (Feb)
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Index data obtained via FactSet
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