Strong rally extending into a second day. After rallying more than 7% to open the week Monday, the S&P 500 Index opened strongly again Tuesday on expectations that the COVID-19 pandemic is increasingly coming under control. Global stocks climbed overnight but trailed US gains. Uncertainty remains on how long social-distancing and quarantine measures will need to stay in place, and any good news is welcome after continued downward revisions to economic growth and earnings expectations.
Small business optimism falls. The National Federation of Independent Business (NFIB) Small Business Optimism Index fell the most in its history from elevated levels in March. Many small businesses are facing heavy challenges from mandated shutdowns, a slowing economy, and more difficult access to credit. Access to loans through the CARES federal stimulus program will provide some added support, but it has yet to come on line fully.
The end of the expansion. We are likely in a recession, which means the more than 10-year record economic expansion is over, although this recession is unlike any we’ve ever seen before. Remember, the average recession has lasted 11 months, with the shortest ever lasting only 6 months. Stocks have tended to bottom and rally well before the recession is over, as they sniff out upcoming growth. We discuss these important themes 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 1-978965