Market Update: Fri, Jan 3, 2020 | LPL Financial Research

Daily Insights

Stocks lower on airstrike news. U.S. stocks are lower this morning as global markets react to a U.S. airstrike in Iran that killed a top Iranian military official. The strike could escalate tensions in the Middle East, curbing risk appetite in the short term and potentially hindering a frail global economic recovery. WTI crude oil prices have jumped to the highest level since May on speculation that tensions could lead to disruption in the global flow of oil.

Start of volatility. Today’s action could be the start of a volatile period with the S&P 500 Index trading near record highs. While we don’t think these newest headlines will have a significant impact on U.S. stocks long term, we understand that equities could be ripe for a pullback. If the S&P 500 slides further, we’d look for initial support around 3,030, which was the benchmark’s July 2019 high.

Trouble ahead? 2019 was the best year for stocks since 2013, with the S&P 500 up more than 31% on a total return basis. Some may think a big year for stocks could mean trouble ahead, but history shows this may not be the case. Since 1950, the S&P 500 has been up more than 30% 12 other times, and the average return the following year was nearly 15%. We’ll dig more into the S&P 500’s track record following a big year today on the LPL Research blog.

LPL Research on CNBC. It was a busy week to kick off the new year for the LPL Strategists, as Chief Investment Strategist John Lynch was on CNBC’s Power Lunch and Senior Market Strategist Ryan Detrick was on CNBC’s Squawk Box.


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