Market Update: Tues, Oct 29, 2019 | LPL Financial Research

Daily Insights

All-time highs. The S&P 500 Index rose 0.6% to close at an all-time high of 3039.42 on October 28, notching its first record-high close since July. Stocks are taking a breather this morning after a four-day rally fueled by positive trade and geopolitical headlines. However, there are still several unresolved issues globally, and they could lead to some volatility at these levels. We expect these issues to be temporary speedbumps for stocks in the long run, though.

Brexit developments. The United Kingdom’s (U.K.) pending exit from the European Union (E.U.), or Brexit, remains unresolved. U.K. Prime Minister Boris Johnson is pushing plans for another U.K. general election just days after the E.U. granted a three-month delay to the October 31 deadline. U.K. Parliament is scheduled to vote later today on whether to allow a December election with opposing Labour Party leader Jeremy Corbyn highlighting his party’s support of the election after no-deal Brexit risk de-escalated.

Yields rally for a third week. Stocks’ recent strength has been a respite for yield-seeking fixed income investors. The 10-year U.S. Treasury yield increased for three straight weeks for the first time since September 2018, and it closed at a fresh one-month high of 1.84% on October 28. We feel encouraged by yields’ rally and the gradual normalization of the Treasury yield curve, but we think it could take some time for the 10-year yield to climb meaningfully higher from these levels.

Third time’s a charm? The Federal Reserve is set to cut rates Wednesday, in what would be the third consecutive 25 basis point (0.25%) cut. Historically, stocks have done very well after three straight 25 basis cuts to start a cycle. That happened in 1975, 1995, and 1998, and stocks gained significantly over the following year. On the LPL Research blog today, we’ll dig into stocks’ performance in similar rate-cut cycles.

NEW Market Signals podcast. 2019 could be the best year ever, unless a few tricks get in the way of this bull market. On this week’s Market Signals podcast, The Best Year Ever?, LPL strategists discuss trade tensions, worrisome signs out of the bond market, a potential Fed policy misstep, slowing global manufacturing, and geopolitical risks.  To listen to previous podcasts go to Market Signals podcast. Subscribe to the free Market Signals podcast series on iTunes, Google Play, Spotify, or wherever you get your podcasts.

 

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All performance referenced is historical and is no guarantee of future results.

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