Market Update: Wed, Aug 19, 2020 | LPL Financial Research


The day after. US market equities opened mixed this morning in the wake of the S&P 500 Index reaching an all- time high since COVID-19’s onset. Improving COVID-19 and housing numbers along with a potential compromise in stimulus talks appear to be influencing investors. Asian markets showed mixed results, while European markets are mostly higher during midday trading.

New highs. The S&P 500 finally made a new high for the first time since February 19. This officially makes the bear market earlier this year the quickest bear market ever (just over a month) and the subsequent recovery of five months one of the fastest ever. The good news is stock returns after new highs can be quite strong, as we will discuss later today on the LPL Research blog.

Housing didn’t get the memo. The economy might still be in a recession, but no one told the housing market. July housing starts came in well above expectations at 1.496 million, while July building permits beat expectations nicely as well (source: US Census Bureau). These results came on the heels of the August National Association of Home Builders (NAHB) Housing Market Index (HMI) hitting its highest level since 1998 on Monday. This is the first recession we can recall that saw little to no impact in the housing market and is yet another clue the recession is likely over.

Technical update. The S&P 500 set a new all-time high Tuesday after eclipsing the 3386 mark to close at 3389, propelled by a surge in consumer discretionary and communication services sectors. We now look for resistance from former highs to turn into support, with 3677 marking the next potential price target based on Fibonacci retracements.

COVID-19 news. New US cases fell 27.2% on Tuesday compared to the prior week, while the seven-day average fell 7.9% over the past week and continues its nearly four–week downtrend (source: COVID Tracking Project). Hospitalizations fell 9.8% week over week based on seven-day averages, breaking the six-day streak with a drop of more than 10%. College campuses are getting a lot of attention as classes begin, including the University of North Carolina and Notre Dame, where cases have increased.

LPL Research in the Media

LPL Financial Chief Market Strategist CNN, while Equity Strategist Jeff Buchbinder was quoted in Reuters.



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