Charging past 3,300. Trade optimism and fourth-quarter earnings results continue to lift U.S. stocks. The S&P 500 Index rose 0.8% on Thursday, breaking above the 3,300 level to close at another record high. Equity markets continue to make new highs with several sectors participating. The S&P 500 is overbought from a technical analysis perspective in the near-term, but has solid support near 3,050, which is about 8% below current levels.
Small caps lead. Under the surface, we have seen leadership from small caps lately, which is a good sign as this group has many more stocks than large caps. The Russell 2000 Index of small cap stocks hasn’t made a new all-time high since August 2018, but it’s about 2% away from a record after the latest move up. Emerging markets have also taken a leadership role over the past few months. This is one group we continue to like from a technical point of view. When assets like copper and other industrial metals are strong, as they have been, this is usually a tailwind for emerging markets.
China GDP growth stabilizes. China’s gross domestic product (GDP) grew 6% year over year in the fourth quarter of 2019, the same pace as the third quarter. While an unchanged pace of growth is a mixed development, it’s an improvement from China GDP’s five straight quarters of declining growth amid trade tensions. We’re continuing to see signs of stabilization in global data, an encouraging development given the difficult 2019 many overseas economies weathered.
Stocks and election years. Many investors are eyeing the upcoming presidential election as an impending storm for the stock market. There’s a lot of uncertainty surrounding the November vote, but history shows stocks have thrived in years when a sitting president is up for re-election. We’ll dig into the data today on the LPL Research blog.
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.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity
- Not Insured by FDIC/NCUA or Any Other Government Agency
- Not Bank/Credit Union Guaranteed
- Not Bank/Credit Union Deposits or Obligations
- May Lose Value
For Public Use – Tracking # 1-939541