Markets giving up some gains into the weekend. Following the historic run over the past three days, US equities are lower in early trading Friday. The United States now has more confirmed cases of COVID-19 than China, though far fewer deaths. The stimulus package is expected to pass through the House of Representatives today before heading to the White House for President Trump’s signature, though if any lawmaker objects to the special “voice vote,” a delay remains a possibility.
Will investors take weaker economic news in stride? Earlier this week, the IHS Markit Flash U.S. PMI Composite™ for March 2020 reached an all-time series low, with manufacturing and services being hindered by COVID-19 and social distancing. In our Road to Recovery Playbook, we have a factor that emphasizes whether or not there is visibility into the probability and severity of a US recession. We believe this particular economic release certainly points toward recession, but importantly, we believe that was already the expectation of most investors. In fact, on the day of this economic release, the S&P 500 Index rallied nearly 10% as investors increasingly believed Congress would pass a massive fiscal stimulus package. For more details read today’s LPL Research blog.
A bull market? The Dow gained more than 20% from the recent lows in a record three days. Many in the media have dubbed this a new bull market. At this time, the market is in the process of forming a bottom, but we’d be very careful to call this a new bull market as large bounces tend to happen, even in bear markets.
Could yields actually rise after the Fed’s bazooka? With the major stock market indexes all entering a bear market this month, it’s no surprise that stocks have stolen most of the spotlight. However, actions taken by the Federal Reserve (Fed) to support what may be considered the safest part of the bond market, US Treasuries, may actually have more lasting implications for investors’ portfolios. We look at where Treasury yields might be headed following unprecedented moves by the Fed over the past week in today’s 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.
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 1-973438