Market Update: Mon, Apr 1, 2019 | LPL Financial Research

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Daily Insights

Chinese manufacturing unexpectedly rebounds. Two separate reports showed that manufacturing activity in China expanded month over month and topped consensus forecasts. While some economists are suggesting the Lunar New Year could be distorting recent data, the fact that both surveys are in expansionary territory suggests government stimulus measures are starting to work, while optimism toward a trade deal is likely buoying business sentiment.

Retail sales unexpectedly decline in February. Sales in February dropped 0.2% month over month, well short of consensus for +0.3%. Weakness was broad-based, though materials/garden equipment sales and food/beverage stood out. Control group sales, which feed into gross domestic product (GDP),  were -0.2% vs. +0.2% expected. However, January data were very strong and revised higher, and the surprise drop in February could at least in part be attributed to delays in processing tax refunds mid-month. While the data confirms the soft patch in first quarter GDP, it doesn’t take away from what remains a healthy consumer overall.

The NCAA Final Four is set. On the men’s side, Auburn, Michigan State, Texas Tech and Virginia are headed to Minneapolis to determine this year’s men’s college basketball national champion. On the women’s side, University of Connecticut and Oregon punched their tickets over the weekend while the other two spots will be decided tonight- Baylor and Notre Dame are the favorites. In that spirit, our weekly commentaries discuss our “final four” factors for the markets and economy over the balance of the year. In today’s Weekly Market Commentary, we share our “Final Four Factors” for the stock market in 2019: Policy, U.S. economy, rates, and profits. While we expect a hard-fought battle between these factors and, with it, some market volatility, we still see the potential for further gains for stocks this year. However, given recent strength, the risk-reward trade-off for U.S. equities has become less attractive, as we wrote here last week, and we recommend a market weight equities allocation. The Weekly Economic Commentary looks at the four biggest catalysts we think could jump-start economic growth.

April showers. April showers bring…green stocks? Seasonality could be on the bulls’ side this month, especially after the S&P 500 Index’s best quarter in 20 years. On the LPL Research blog later today, we’ll highlight April’s history of consistent gains, and analyze if investors could reap the benefits of seasonality once again this year.

Week ahead. This week we get several important economic announcements. In the U.S., several top tier reports are due out on both the services and manufacturing sector, though nonfarm payrolls headlines the docket. Abroad, Brexit will remain in the European spotlight, though a host of countries will post closely-watched PMI data, including Japan, China, and the composite Eurozone. Track these and other important events on our Weekly Global Economic & Policy Calendar.

NEW Street View video. Chief Investment Strategist John Lynch discusses LPL Research’s reasons for adjusting our recommended domestic equity allocations. Watch and share the video now.

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Click Here for our detailed Weekly Economic Calendar

Monday

  • Retail Sales (MoM, Feb)
  • Markit US Manufacturing PMI (Mar)
  • ISM Manufacturing PMI (Mar)
  • Markit/BME Germany Manufacturing PMI (Mar)
  • Markit Eurozone Manufacturing PMI (Mar)
  • Eurozone CPI Report (Preliminary, Mar)

Tuesday

  • Durable Goods Orders (Preliminary, MoM Feb)
  • Eurozone PPI Report (Feb)
  • Nikkei Japan Composite PMI (Mar)
  • Caixin China Composite PMI (Mar)
  • Caixin China Services PMI (Mar)

Wednesday

  • ADP Employment Report (Mar)
  • Markit US Services PMI (Mar)
  • Markit US Composite PMI (Mar)
  • ISM Non-Manufacturing Index (Mar)
  • Markit/BME Germany Composite PMI (Mar)
  • Markit Eurozone Composite PMI (Mar)
  • Eurozone Retail Sales (Feb)

Thursday

Friday

  • Nonfarm Payrolls (Mar)
  • Unemployment Rate (Mar)
  • Japan Leading Index (Preliminary Feb)
  • Japan Coincident Index (Preliminary, Feb)
  • Germany Industrial Production (Feb)

 

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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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Index data obtained via FactSet

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