Wednesday, January 27, 2021
Busy Day for Earnings
35 S&P 500 Index companies are slated to report Q4 earnings results today. Current earnings growth is tracking a roughly 5% decline year over year (source: FactSet). So far this season, 68 companies have reported positive earnings growth while 42 have reported negative growth.
Stocks sink ahead of Federal Reserve meeting
S&P 500 Index opens 1% lower today, and the Russell 2000 Index is underperforming.
- European stocks are also firmly lower in midday trading.
- Asian markets closed mixed, with Hong Kong the underperformer.
First Fed policy meeting of 2021 concludes today
The Federal Reserve (Fed) policy is practically a lock to remain unchanged, and meaningful changes in the Fed’s bond purchase program are unlikely.
- The Fed’s main goal will be to reassure markets it is not considering reducing policy support in the near term.
- Post-meeting materials will not include updated projections.
- The meeting will be followed by a press conference at 2:30 p.m. ET by Fed Chair Jerome Powell, which will give him an opportunity to tweak the Fed’s messaging.
A closer look at stocks in presidential cycles
This is the first year of a new four-year presidential cycle. Historically, stock returns in the first year have tended to be weak with a new president, while February has been the worst month of the year under a new president. We look at this phenomena later today on the LPL Research blog.
The S&P 500 traded in a tight range Tuesday and continued to struggle to eclipse a key resistance level at 3852. Stocks are falling in early trading and will first look to hold the Monday intraday low at 3797. Below that, support can be found at 3749.
The United States reported 143,000 new COVID-19 cases on Tuesday, the third straight day below the 7-day moving average (source: COVID Tracking Project).
- Hospitalizations have fallen in almost every state over the past two weeks.
- Spain and France continue to be hotspots in Western Europe.
Positive Trends Send Strong Signals
This week’s Market Signals podcast discusses why positive COVID-19 news, solid small caps performance, high stock valuations, and more positive data trends are sending strong signals for 2021. Watch Market Signals: Positive Trends Send Strong Signals for 2021.
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.
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 # 1-05104324