Market Update: Wed, Jan 8, 2020 | LPL Financial Research

Daily Insights

Iran retaliates. U.S. stocks are higher this morning after a volatile night in the U.S.-Iran conflict. S&P 500 Index futures dipped 1.5% and global markets swung after Iran fired several ballistic missiles at U.S.-Iraqi military bases Tuesday night. S&P 500 futures recovered their losses overnight on news that there were no American casualties in the incident, but tensions remain high in the Middle East. Investors should be prepared for continued volatility as the situation develops and stocks trade near record highs.

Stocks and geopolitical events. As concerns over the Iran conflict continue to build, we’ve received many questions asking what this could mean for the market outlook. We discussed our initial thoughts regarding the conflict in our Jan. 6 blog, but we believe it is important for investors to remember that there have been many times historically when stocks stood strong in times of conflict. Today on the LPL Research blog, we’ll take a look at stock performance during past geopolitical events (with the help of our friends at CFRA).

Services activity rises. U.S. services activity climbed in December, easing worries that a steady decline in global manufacturing could be weighing on other segments of the economy. The Institute for Supply Management’s (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI) rose to a four-month high of 55, according to December data released Tuesday. The domestic services sector comprises a significantly higher share of economic output (relative to manufacturing), so we’re encouraged by evidence of solid demand.

Strong ADP jobs report. Automatic Data Processing’s (ADP) tally of new jobs created in December was 202,000, well ahead of the Bloomberg-tracked consensus forecast calling for 160,000 new jobs. In addition, November’s job count was revised higher by 57,000. Though this report’s track record as a predictor of the U.S. government’s more comprehensive monthly job count is spotty, this ADP report may bode well for Friday’s payrolls employment report (Bloomberg’s consensus forecast is 160,000).

 

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