Market Update: Thur, Jul 23, 2020 | LPL Financial Research


Stocks opened little changed. The S&P 500 Index is trying for its sixth straight positive session as mostly well-received earnings results and optimism that the next big stimulus package out of Washington, DC, will soon be secured are offset by rising weekly jobless claims. Asian markets closed mixed, with gains in Hong Kong’s Hang Seng and a modest loss in China’s Shanghai Composite amid escalating US-China tensions. Trading in Japan was closed for a holiday. European markets are largely flat.

A record for the Nasdaq. History will be made today—it will be 49 consecutive trading days since the Nasdaq has closed down back-to-back days, topping its previous all-time record of 48 trading days in 1978. The past few months have been historic in many ways, but the persistent bid from the Nasdaq (and large cap tech) has been truly phenomenal. In the near-term, more caution on technology and the Nasdaq seems prudent, however, we still expect this group to lead over the final five months of this year.

Global earnings estimates are rising. Estimates for developed international and emerging market earnings have risen since earnings season began two weeks ago, bucking the historical trend of estimates dropping as results are reported (source: FactSet).

No change to regional preferences. We continue to find non-US equities more attractively valued, but on fundamentals, we continue to give the United States and emerging markets an edge over Europe and the United Kingdom. Within developed markets, we favor Japan.

Claims downtrend stalls. Filings for initial jobless claims came in higher than expected at 1.42 million for the week ending July 18, the first increase since March and ending the 15-week streak of declines (source: US Bureau of Labor Statistics). Continuing claims fell to 16.2 million for the week ending July 11, down more than one million from the prior week and much better than Bloomberg’s consensus forecast of 17.1 million. The improvement in continuing claims is encouraging, but the stall in new filings underscores the long road ahead for the job market recovery.

LPL Research Midyear Outlook 2020 in Charts. Chief Market Strategist Ryan Detrick and Equity Strategist Jeffrey Buchbinder share LPL Research’s 2020 midyear outlook presentation and preview election 2020. Watch our new video on the LPL Research YouTube channel.

Can dollar weakness continue? The dollar has declined more than 8% in the four months since the stock market bottomed. We take a look at whether this can continue and what the implications may be for investors’ portfolios later today on the LPL Research blog.

COVID-19 news. The curve continued to flatten with 71,700 new cases in the United States on Wednesday, up 6.5% week over week as tests rose 4.4%. The seven-day average rose 6.3%, down from more than 21% a week ago (source: Johns Hopkins). Global cases surpassed 15 million, including another daily record in Brazil. Hong Kong put in tough restrictions on travel from the US after its latest surge. Congress begins negotiations on a $1 trillion COVID-19 relief package.



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