Market Update: Mon, Jun 29, 2020 | LPL Financial Research


Stocks opened higher. The latest wave of COVID-19 cases is not bothering US markets this morning, even as some re-openings in southern and western states have been put on hold. Facebook weakness is trimming the Nasdaq’s gains, while Boeing gains are boosting the Dow. European markets are matching US gains in midday trading, while Asian markets were broadly lower overnight, led down by Japan’s Nikkei.

Lowering our rates forecast. We’re lowering our 2020 year-end 10-year Treasury yield forecast range to 1–1.5% from 1.25–1.75%. Although the US economic recovery has picked up and we expect yields to rise in the second half of 2020, the pandemic-driven demand shock, the Federal Reserve (Fed), and disinflationary pressures could keep yields low for some time. We discuss this more in this week’s Weekly Market Commentary, available after 1 p.m. ET.

High frequency data points to possible plateau. Small business hiring in southern hotspot states and restaurant diners are among the timely indicators pointing to a pause in the recovery, although data on consumer confidence, retail sales, and mobility continued its steady recovery last week. The New York Fed Weekly Economic Index moved further off its late-April lows.

Can stocks predict who will win in November? Incredibly, stocks have called the winner of the presidential election every single time since 1984 and 87% of the time since 1928. It’s quite simple—if stocks are up three months before the election, the incumbent party usually has won, and if stocks are lower, the opposing party has won. We take a look at this interesting development later today on the LPL Research blog.

Week ahead. The holiday-shortened week features Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin’s US House testimony on Tuesday, the Institute for Supply Management’s (ISM) manufacturing survey on Wednesday (Bloomberg’s consensus 49.5, up from 43.1), and the June jobs report on Thursday (consensus:  adding 3 million jobs, unemployment rate down about one percentage point to 12.4%).

COVID-19 news. Global cases passed 10 million while deaths hit 500,000. On Sunday, US cases rose 47% week over week to near 39,000. Florida, Georgia, Nevada and South Carolina reported record daily cases on Saturday. Brazil, South Africa and India are among global hotspots yet to flatten the curve (Source: COVID-19 Tracking Project).


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