Market Update: Fri, Oct 25, 2019 | LPL Financial Research

Daily Insights

Gradually climbing. Stocks are mixed this morning as investors weigh geopolitical headlines and a busy week of third-quarter earnings releases. The S&P 500 Index has gradually climbed this week, pushing within 0.7% of a record-high close (3025.86) in trading each day. We have yet to see fresh all-time highs, and it may take another batch of headlines to give the market some direction in the near term.

Not quite yet. The S&P 500 continues to churn just below all-time highs. However, the fourth quarter is historically the S&P 500’s strongest period of the year, and we see numerous bullish signs that suggest stocks are acting better than headlines might suggest. Europe is at 52-week highs, cyclical sectors are outperforming defensive sectors, and the dollar is weakening (a positive for both U.S. earnings and globally diversified investors). Going forward, we’ll be closely watching sentiment for signs of excessive optimism. For now, though, investor positioning remains restrained.

Looking for a spark. A U.S.-China trade truce wasn’t enough to spark global manufacturing activity in October, according to Markit’s preliminary October Purchasing Managers’ Index (PMI) data. U.S. manufacturing perked up, but Eurozone, Germany, and Japan manufacturing remain at multi-year lows. We’ll dig into the most recent Markit data today on the LPL Research blog.

 

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