Market Update: Tues, Oct 27, 2020 | LPL Financial Research

Daily Insights

Stimulus, COVID-19 concerns send S&P 500 Index to worst day in a month. Weakness in travel and leisure stocks highlighted rising COVID-19 concerns. At the same time, there was little sign of a large rotation trade.

  • Value stocks lagged growth, but small caps largely hung in with large.
  • Treasury yields fell, but declines were not outsized.
  • European markets are modestly lower in midday trading.
  • Asian markets closed flat-to-lower overnight.

Back to fundamentals. The S&P 500 will look to rebound after Monday’s losses, and if it does, part of the story will be refocusing on earnings. Earnings have largely taken a backseat to the progress of stimulus talks and rising COVID-19 cases, but in the end earnings are the main driver of stock returns.

View the Q3 Earnings Season Dashboard

Senators leave DC, making pre-election stimulus less likely. Following the confirmation of Supreme Court Justice Amy Coney Barrett, the Senate began its pre-election recess. The Senate could return for a last-second deal, but Republican senators already have pushed back against the package being negotiated by House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin.

Municipal bond opportunities. With the potential for additional fiscal stimulus after election uncertainty passes, municipal bonds may present an opportunity to gain high-quality bond exposure relative to more expensive Treasuries. We take a look at some of the post-election scenarios for the municipal bond market in today’s LPL Research blog.

Technical update. Stocks saw broad-based selling to begin the week, with the S&P 500 Index losing 1.9% and the Dow Jones Industrial Average falling 2.3%. Internal data was the worst in more than a month, with decliners outnumbering advancers on the New York Stock Exchange. US equities are bouncing this morning, and the S&P 500 will try to reclaim the 3425 level.

COVID-19 news. The uptrend in US COVID-19 cases continued Monday as a 9% increase week over week pushed the seven-day average up 22% over the prior week to near 70,000 (source: COVID Tracking Project). Hospitalizations continue to trend higher but remain well short of spring highs. Germany may be headed for a light lockdown with restaurant closures and bans on big events. Eli Lilly scrapped trials of an antibody therapy on patients in advanced stages of treatment.



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.

All index and market data are from FactSet and MarketWatch.

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 1-05071869