Market Update: Thurs, Mar 19, 2020 | LPL Financial Research

DAILY INSIGHTS

Lower again. US stocks opened lower, after big gains yesterday. Incredibly, Tuesday was the seventh consecutive day the S&P 500 Index closed either up or down more than 4%, an all-time record. As COVID-19 cases continue to grow and social-distancing efforts are strengthened around the United States and globally, expectations for economic growth and corporate profits continue to fall.

Stimulus plan is coming. Washington, D.C., plans to quickly deliver a stimulus plan, with estimates it could top $1 trillion. The Senate Republicans’ plan will include as much as $250 billion in emergency loans for small business and $50 billion for airlines. Additionally, the White House has proposed sending as many as two $1,000 checks directly to individual Americans. With unemployment expected to rise, fiscal stimulus is needed to mitigate the economic fallout.

How long until stocks recover? The S&P 500 Index has lost 30% during this bear market, and although we don’t know when the damage will end, we can look back at previous bear markets for a clue as to how soon things will recover. Since 1950, it has taken the average bear market 20 months for stocks to recover their previous peak. It’s important to note that if the economy is in a recession, it has taken 30 months on average to recover versus only 10 if there is no recession. We will take a closer look at this important concept later today on the LPL Research blog.

Trying to hold December 2018 lows. It has only been a few days, but the S&P 500 Index is trying to make a stand and hold above the 2346 level last seen in late 2018. While this is encouraging, the bottoming process can take time, and typically the initial decline is undercut by a second leg lower. Below 2346, we see technical support near the market highs from 2015-2016, around 2140.

IMPORTANT DISCLOSURES

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.

If your representative is located at a bank or credit union,  please note that the bank/credit union is not registered as a broker-dealer or investment advisor.  Registered representatives of LPL may also be employees of the bank/credit union.

These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, the bank/credit union.  Securities and insurance offered through LPL or its affiliates are:

  • 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 1-968378