On the Recession Watch. With the S&P 500 Index at record highs, our outlook remains optimistic, but we don’t want to be complacent. We take a look at some of our favorite leading indicators to see what they say about the economic expansion and its accompanying bull market. Listen to this week’s Market Signals podcast (coming soon!).
Pushing higher. U.S. stocks are pushing higher this morning, with the S&P 500 poised for its fifth straight record-high close. It’s been a quiet period for headlines, but trade optimism and seasonal headwinds have carried equities steadily higher over the past several weeks.
Impressive streaks. Stocks’ recent rally has been unusually persistent, and the S&P 500 has posted a few impressive streaks. The S&P 500 hasn’t been down back-to-back days for 29 straight trading days, the longest streak since March 2005. The benchmark has also closed above its upward-sloping 10-day moving average for 28 days in a row — yet another clue of how strong recent momentum has been. We’ll discuss these achievements today on the LPL Research blog.
Yields take a step back. The 10-year U.S. Treasury yield took a step back last week, falling 0.11% for its biggest weekly decline since the beginning of October. Yields’ decline was especially odd considering the S&P 500 rose last week, as you’d typically expect stocks to fall with yields. We’re not surprised to see yields pause after a 0.40% run over the past six weeks. We still think the 10-year yield’s fair value is higher than its current levels, but Treasuries’ attractive valuations relative to other sovereign debt could keep U.S. yields contained.
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