Market Update: Wed, Oct 9, 2019 | LPL Financial Research

Daily Insights

A partial trade deal. Trade is dominating headlines once again, just a day before U.S. and China officials are slated to kick off face-to-face trade discussions in Washington, D.C. U.S. stocks are higher today on news that China is willing to accept a partial trade deal with the U.S. in order to avoid more tariffs, including tariffs scheduled to take effect in October and December. The reports indicate that China and the U.S. likely won’t agree to a broader trade deal at this meeting, but any agreement could be important thawing before the two sides meet again at the Asia-Pacific Economic Cooperation meeting in November. At the very least, any trade progress helps curb elevated global uncertainty, which should be a positive for risk assets.

A scary October? October has lived up to its volatile reputation so far. The S&P 500 Index has declined at least 1% in three of six trading sessions this month after a calm September. October’s rough start has many investors on edge, especially because the month is known for spectacular crashes–specifically in 1929, 1987, and 2008. However, October has quietly been one of the strongest months of the year over the past 10 and 20 years (as we highlighted in a recent blog post). It’s also the first month of the fourth quarter, which is typically a strong period seasonally for stocks. We’re not surprised to see some swings at these levels, especially as the S&P 500 creeps toward record highs.

Signs of stabilization. Economic pressure continues to build for the United States and China to reach a trade deal. There have been signs of slowing in both regions’ economies, especially in more globally sensitive sectors like manufacturing. However, China’s economic data has perked up recently, and the Organisation for Economic Co-operation and Development’s (OECD) composite leading indicators show that the Chinese economy could be turning the corner. We’ll dive into what the OECD’s leading indicators are telling us today on the LPL Research blog.



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