Two Sides of One Economy. The S&P 500 Index gained for the fifth consecutive week, making many new all-time highs in the process. Positive steps on trade have helped multiple global markets break out to new highs. Meanwhile, consumer spending has upstaged business investment. Find out more on this week’s Market Signals podcast. (Client approved.)
November market insights. October economic data pointed to a slowing but still growing U.S. economy, and the S&P 500 delivered a solid 2.2% gain in October. There was evidence of stabilization in economic growth in Europe and Japan, and emerging markets equities outperformed the S&P 500 return. Gain more insights on October global equities, fixed income, alternatives, and real assets in Market Insights Monthly: October 2019 in Review. Includes charts.
Drifting higher. U.S. stocks are higher on a quiet morning for headlines. Lately, equities have steadily drifted higher amid the absence of negative developments on the trade and geopolitical front. The S&P 500 hasn’t posted two consecutive declines for 24 trading days, the longest streak since August 2016. Improving sentiment and a quiet news period could lead to more stock gains, but investors should be prepared for volatility with a lot of optimism priced in.
Yields rise. The resurgence of risk appetite globally lifted U.S. Treasury yields last week, boosting the 10-year yield to a 3-month high of 1.94%. We’ve been encouraged by long-term yields’ recent rally, especially as they’ve helped steepen the Treasury curve. However, we don’t expect yields to climb much higher from these levels in the short term. Long-term yields’ increase has been swift, and investors could reassess in the face of several unresolved global issues.
Business sentiment climbs. The National Federation of Independent Business’ Small Business Optimism Index climbed in October, reversing a two-month slide. Respondents in the October survey noted plans to increase capital expenditures and hiring, and reported subdued pricing pressures. Progress on the trade front could help lift business sentiment and encourage U.S. companies to resume capital investment, although it’s tough to expect meaningful improvement without more trade resolution. Check out our Weekly Market Commentary: A Tale of Two Economies for our outlook for consumer and business spending.
The bull market in perspective. The 10-year bull market continues to chug along, with the S&P 500 gaining more than 357% since March 2009. What might surprise many investors, though is this isn’t the greatest bull market ever in terms of gains, as the S&P 500 actually rose 417% in the 1990s bull market. We’ll take a closer look at this bull market’s track record later today on the LPL Research blog.
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