Market Update: Mon, Jan 13, 2020 | LPL Financial Research

Daily Insights

Stocks higher. U.S. stocks are higher this morning ahead of a busy week for investors. Earnings reports for the fourth quarter of 2019 will start rolling in on Tuesday, and the United States and China are poised to sign a limited trade agreement on Wednesday. For now, financial markets have shrugged off the prospects for further escalation in the Iran conflict, but that situation could still flare up at any moment. While stocks could continue pushing higher, we encourage investors to be prepared for volatility with major indexes at record highs.

What’s the risk? In this week’s Weekly Market Commentary: Assessing Geopolitical Risk, LPL Research reviews the latest developments in the Middle East and the impact this and other geopolitical events could have on U.S. economic fundamentals and corporate profits. (client approved)

More record highs. Last week the S&P 500 Index posted its 12th weekly gain out of the last 14 weeks. All major averages set fresh record highs as well. Large cap stocks’ market leadership continued, and emerging markets stocks showed solid gains. Review all major equity, equity sectors, fixed income, commodity, and currency indexes in the latest Weekly Market Performance: More Gains Despite Mideast Conflict, provided as of market close Friday, Jan. 10. (client approved)

December 2019 in review. The U.S. economy wrapped up December and closed out 2019 with generally promising data. Trade remained a big story. Underlying data on the U.S. consumer was mixed, and U.S. manufacturing data sent conflicting signals. Review economic data, equities, fixed income, alternative investment, and real asset performance in the new Market Insight Monthly: December 2019 in Review. (client approved)

Earnings expectations. Little earnings growth is expected for the quarter: FactSet consensus is calling for a 2% year-over-year decline in S&P 500 Index earnings. In our view, forward guidance from companies will be particularly important as we move into this year. With valuations elevated, we believe earnings will be the key determinant of potential 2020 stock market gains. Our expectation is mid-single-digit earnings growth for the year. Look for more on earnings season on the LPL Research blog this week.

The week ahead. This week’s economic calendar includes several December data points, including consumer and producer inflation on Tuesday and Wednesday; retail sales on Thursday; and housing starts, building permits, and industrial production on Friday. On Wednesday, the Federal Reserve will release its Beige Book report. Internationally, China will release several important economic reports this week including trade data, retail sales, and industrial production. In Europe, Eurozone consumer inflation data for December will be released on Friday.

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges, Index performance is not indicative of the performance of any investment.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

All performance referenced is historical and is no guarantee of future results.

This research material has been prepared by LPL Financial LLC.

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