LPL Research on CNBC. LPL Financial Senior Market Strategist Ryan Detrick was on CNBC’s The Exchange Wednesday afternoon to discuss the recent market weakness. You can watch the full video here.
Coronavirus fears continue to spread. Stocks opened sharply lower today, following big losses out of Europe. The S&P 500 Index fell for its fifth consecutive day yesterday, as worries continue to grow: The number of overall Covid-19 (coronavirus) cases in the rest of the world now exceeds those in China, and a case of community transmission was reported in the United States. President Trump announced last night that the risk to Americans remained very low, but that didn’t stop Microsoft from announcing it wouldn’t meet its March quarter guidance due to the coronavirus.
S&P 500 nearing first support. U.S. equities are down sharply in early trading, with the S&P 500 now at its 200-day moving average and near our first technical support level at 3030. Various indicators are beginning to flash short-term oversold conditions, but sentiment and signs of excessive fear will be key to finding a bottom.
Surprising earnings resilience. We continue to be amazed by how well earnings estimates for 2020 have held up amid the viral outbreak. Year to date, FactSet-tracked consensus earnings per share (EPS) estimates for the S&P 500 have fallen by a little more than 1%, despite several high-profile profit warnings from Apple, Microsoft, a number of travel-oriented businesses, and others. We see increased downside risk to our $175 per share forecast for 2020 S&P 500 earnings from the supply chain and demand impacts. But the momentum corporate America was enjoying coming into 2020, as we discussed in our recent Weekly Market Commentary, should help cushion the blow.
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