Market Update: Tues, Jan 7, 2020 | LPL Financial Research

Daily Insights

Stocks shrug off tensions. U.S. stocks opened little changed, shrugging off heightened geopolitical tensions after the U.S. airstrike in Iran. Investors are still evaluating what the attack could mean for financial markets and how Iran could respond. However, for now, it looks like U.S. investors think escalating tensions won’t materially impact fundamentals (a view we agree with at this point). For more of our thoughts on possible market implications of the Iran attack, check out our January 6 LPL Research blog post, “What Mideast Escalation Means for Markets.”

New year, same 10-year yield. It’s a new year with the same old action in the 10-year U.S. Treasury yield. The 10-year yield climbed as high as 1.92% in late December 2019, then slid on U.S. airstrike headlines as the calendar turned. The benchmark has struggled to close above 2% for several months now as headlines and global buying pressure have weighed on longer-term yields. We expect these forces to continue capping yields in the near-term.

U.S. manufacturing declines. U.S. manufacturing health slid to an economic cycle low in December, according to the Institute for Supply Management’s Purchasing Managers’ Index report. We had hoped to see some stabilization in domestic manufacturing accompany trade progress, but Friday’s report showed the sector may take a while to bounce back. We’re still constructive on economic fundamentals, though, even amid manufacturing’s malaise. We’ll dig into recent manufacturing data more today on the LPL Research blog.

The last decade and the next. Listen to our first Market Signals podcast of the new year as Chief Investment Strategist John Lynch and Senior Market Strategist Ryan Detrick review the last decade, the hits and misses of 2019, what they expect in 2020, and the curse of the Mothman.

 

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