Stocks rise. Global stocks are higher this morning ahead of a busy two weeks, especially on the monetary policy front. The European Central Bank (ECB) is expected to announce more accommodation in the form of bond-buying, negative interest rates, or both at the conclusion of its policy meeting Thursday, September 12. Next week, the Federal Reserve (Fed) will hold a two-day policy meeting, concluding with a rate announcement September 18. A Fed rate cut at the upcoming meeting appears likely, especially in the context of recent communication. On September 6, Fed Chair Jerome Powell repeated publicly that policymakers will act as appropriate to sustain the expansion, but emphasized that the U.S. economic outlook still looks favorable.
Another positive week on trade optimism. The S&P 500 Index rose 1.8% during the holiday-shortened week as investors digested several geopolitical and trade headlines alongside a mixed batch of key economic data. The week started off on a down note, as stocks sold off amid signs the U.S. manufacturing sector contracted slightly during August. Stocks bounced back strongly on Wednesday and Thursday on several positive geopolitical and trade headlines, including news that the United States and China agreed to hold high-level trade talks in early October. See our latest Weekly Market Performance report for a recap of last week’s market activity.
Corporate earnings outlook. We lowered our 2019 earnings growth forecast for the S&P 500 on August 19 due to increased risk to economic growth and corporate profits from the ongoing trade conflict between the United States and China. We believe it is prudent to be somewhat conservative in our forecasts until we get more clarity on trade. Until we get that clarity, we believe earnings can still grow, but only modestly. More on this muddle through earnings environment in our latest Weekly Market Commentary.
Weekly Economic Calendar. In the week ahead, U.S. investors will get a look at recent inflation trends in the August Producer Price Index (PPI) report, which will come out Wednesday, and the August Consumer Price Index (CPI) report, which will be released Thursday. August retail sales data will also come out on Friday, September 13. Internationally, the ECB meeting will be in focus, as well as a slew of inflation reports for several regions.
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.
U.S. Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk.
Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
All performance referenced is historical and is no guarantee of future results.
This research material has been prepared by LPL Financial LLC.
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