Stocks opened slightly lower. The S&P 500 Index is down slightly in early trading on a quiet day for economic data. Tuesday, market participants will focus on stimulus talks in Washington, United States and China tensions, earnings season, and COVID-19 trends. European markets are modestly lower, in-line with the United States in midday trading. Key Asian markets closed solidly higher across the board, tracking Monday’s strong US gains.
Second quarter earnings season. With over 60% of S&P 500 companies having reported, results have solidly bested expectations for the second quarter and forward estimates for the index have impressively risen.
Worst year for Treasuries—2009. Most of the worst years for 10-year US Treasury returns in the last 50 years aren’t surprising. Whether because of inflation or growth, the Federal Reserve was raising rates for all of them, except for one. The good news is that 4 out of 5 of the worst years were mid-to-late cycle, not where we are today. But the worst year, 2009, has some eerie similarities with where we are now. Still, we think there are more powerful forces in play now to help keep a lid on rates. For more on the worst years for Treasuries and what it might tell us about today’s Treasury market, see today’s LPL Research blog.
COVID-19 news. New cases in the United States fell 19.2% over the past week to 45,600, while the seven-day average fell 7.6% through Monday (source: Johns Hopkins). Hospitalizations continued to trend lower in second-wave states across the South and West. The curve has been bent lower nationally, but several states, including Maryland, Montana, and Virginia, have seen an increase. New case trends appear to be flattening out in Europe, but cases continue to rise in Germany, Spain, the Netherlands, and Belgium. Infections reached a record in the Philippines.
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