Market Update: Wed, Aug 21, 2019 | LPL Financial Research

Daily Insights

Another quiet day. Global stocks are trending higher on another light day for headlines and data. It’s quiet right now, but that will likely change in the next few days as investors parse through minutes from the Federal Reserve’s (Fed) July meeting and data on global manufacturing health. Fed policymakers are also scheduled to kick off the Fed’s annual Economic Policy Symposium in Jackson Hole, WY, on Friday. Fed Chair Jerome Powell and other speakers are expected to provide commentary on the future of U.S. monetary policy, an especially sensitive topic for markets after the Fed cut rates last month.

Signs of recovery. U.S. stocks have stabilized over the past few days, a nice reprieve after a sudden bout of late-summer volatility. Over the past few weeks, the S&P 500 Index has dropped as much as 6% from a July 26 record high amid a combination of trade uncertainty, plunging global bond yields, and conflicting messages between the United States and global economies. Even though U.S. stocks are showing signs of recovery, we’re in the dog days of summer, and more volatility could be ahead as investors focus on headlines.

Value and growth. Growth stocks have had an unprecedented run of outperformance (versus value stocks) for over a decade now. In the past, we’ve pointed to valuations, interest rates, and the economic outlook as a case for value stocks. However, a more accommodative Fed and lower global yields could hold value stocks back now, so we’ve recently changed our recommendation to a balanced exposure between the two styles. We’ll explain this shift later today on the LPL Research blog.

NEW Market Signals Podcast. This week’s Market Signals podcast comes to you from Focus 2019, where LPL’s Chief Investment Strategist John Lynch and Senior Market Strategist Ryan Detrick have been meeting with advisors, listening to what you have to say, and celebrating one year of Market Signals podcasts. LPL was the first broker-dealer to provide advisors a podcast dedicated to the markets and economy. One year later, we’re still going strong. Can we say the same for our markets? Subscribe to the free Market Signals podcast series on iTunes, Google Play, Spotify, or wherever you get your podcasts.

 

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