Market Update: Fri, Dec 20, 2019 | LPL Financial Research

Daily Insights

Powering ahead. Stocks have powered through impeachment headlines this week, carried by seasonal tailwinds. The S&P 500 Index has climbed 1.2% this week through Thursday, poised for its 10th weekly gain in 11 weeks. The calendar is quiet through the end of the year, and we’re coming up on one of the S&P 500’s strongest weeks historically. Since 1950, the S&P 500 has gained an average of 0.6% in the 52nd calendar week of the year.

Watching sentiment. Sentiment will be important to monitor going forward, though. The Bull-Bear Spread on the American Association of Individual Investors weekly survey just hit its highest level since February, reflecting increased levels of optimism among retail investors. Fear seems to be dissipating among investors, and extreme sentiment could be a contrarian signal for stocks.

A pivotal point for leading indicators. U.S. leading indicators continued to stabilize in November after three straight months in decline. The Conference Board’s Leading Economic Index (LEI) was unchanged month over month, and it grew 0.1% year over year. The LEI’s slowing growth has caught our attention, but we believe several factors could help leading indicators reach a bottom in the near future. We’ll dig into the latest LEI data today on the LPL Research blog.

December top picks. In the new December Portfolio Compass, LPL Research downgrades real estate and investment-grade corporate bonds, but still believes in emerging markets over developed foreign markets. Get all our top picks for equity asset classes, equity sectors, fixed income, and commodities in the new Portfolio Compass. (client approved)

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