Stocks fall after jump in coronavirus cases. China’s Hubei province where the virus outbreak originated reported 15,000 new cases overnight after revising its diagnostic method for reporting data to include “clinically diagnosed” cases — a quicker method that casts a wider net.
Pause not surprising. After stocks rose in seven out of the past eight sessions, a bit of a pause for the S&P 500 Index would not be surprising, as the S&P 500 opened about 0.4% lower this morning. Asian markets closed mostly lower overnight, led downward by a 0.7% decline in the Shanghai Composite, while European markets are down about 0.5% in midday trading overseas. The 10-year Treasury yield is down modestly to 1.61%.
Virus outbreak interrupting, not halting, global growth stabilization. We see the disruption to economic activity in China as delaying, not halting, the global economy’s progress toward stabilization. Improvement in the Organisation for Economic Co-operation and Development (OECD) global leading indicators is among the positive developments. The reading for the major seven economies improved in December for the third straight month while the outlooks for the United States, United Kingdom, Germany, and Brazil were all upgraded. As discussed in our Weekly Market Commentary, we have warmed up to developed international equity markets, but are waiting for more signs of a sustained turn before making a move.
Consumer inflation in holding pattern. The core Consumer Price Index (CPI), which excludes food and energy, rose 2.3% year over year in January. This is in line with recent months and at the high end of the range of the economic cycle, but not high enough to be worrisome for the Federal Reserve (Fed) or financial markets in our view. These data show that companies still have ample pricing power, a good sign for future profits and economic durability. We discuss the CPI data today on the LPL Research blog.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
Any 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 information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This Research material was 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 #1-951158