Market Update: Tues, Apr 23, 2019 | LPL Financial Research

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Hovering near new highs. U.S. stocks have stalled near record highs as investors sort through first-quarter earnings and a slowly improving global landscape. Monday was the 13th straight day the S&P 500 Index closed within 2% of an all-time high (without actually reaching a new high). Since 1995, the S&P 500 has gone as long as 18 days within this range without making a record high, so history shows U.S. stocks could break in either direction soon. We think the S&P 500’s fair value is about 3% from these levels, but the path to that fair value may not be straight.

Signs of steepening. Last month’s quick inversion has woken the U.S. yield curve up. The spread between the 2-year and 10-year Treasury yield has climbed for four straight weeks, the longest streak since November 2016. The yield curve is still historically flat, but we see signs that longer-term steepening could be in process. We’ll outline these signs later today on the LPL Research blog.

Corporate spreads easing. Spreads on U.S. corporate debt have steadily declined since peaking at the beginning of this year, even as Treasury yields have fluctuated amid mixed economic signals. Investment-grade and high-yield debt spreads are now sitting around their lows of the cycle, reflecting strength in U.S. companies’ balance sheets across the credit spectrum.

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Tuesday

  • Richmond Fed Manufacturing Index (Apr); Cons: 10, LP: 10
  • New Home Sales (MoM, Mar); Cons: -2.6%, LP: 4.9%
  • Eurozone Consumer Confidence (Preliminary, Apr)

Wednesday

  • Japan Leading Index (Feb)
  • Japan Coincident Index (Feb)
  • Bank of Japan Rate Decision (Apr)
  • Germany Import Prices (Mar)

Thursday

  • Durable Goods Orders (Preliminary, MoM, Mar); Cons: 0.5%, LP: -1.6%
  • Initial Jobless Claims (Apr. 20); LP: 196K
  • Kansas City Fed Manufacturing Activity Index (Apr); LP: 10
  • Japan Jobless Rate (Mar)
  • Japan Tokyo CPI Report (Apr)
  • Japan Industrial Production (Preliminary, Mar)

Friday

  • GDP Report (Initial, Q1 2019); Cons: 1.8%, LP: 2.2%
  • University of Michigan Sentiment Index (Apr); LP: 96.9
  • China Industrial Profits (Mar)

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Index data obtained via FactSet

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