Tuesday, May 4, 2021
Sell In May?
LPL Research punches holes in the “Sell in May” axiom and reflects on how the economic data continues to come in extremely strong as the economy opens up faster than expected in the latest LPL Market Signals podcast.
U.S. stocks open lower as 10-year Treasury yield falls back toward 1.6%
- European markets are mostly lower in midday trading with the German DAX under pressure.
- Asian stocks were mixed overnight with Korea snapping a five-day losing streak, though China and Japan remain closed for the holiday.
ISM may have signaled peak growth, but plenty of growth still ahead
- Yesterday’s ISM Manufacturing Purchasing Managers’ Index decline is one of a slew of signals we expect to get over the next six months that recent growth is peaking.
- While often a sign of a more challenging phase ahead for stocks, we believe the post-peak growth period will still be unusually strong.
- Stocks have priced in a lot of good news and gains may be harder to come by but the overall economic backdrop remains positive.
- Watch what’s happening abroad for upside catalysts: Peak growth in Europe and Japan may come later than the United States, and Brazil and India are still struggling to contain the pandemic.
Five things to know about preferred securities
- With yields as low as they are, income-oriented investors may need to look to non-core fixed income alternatives. One alternative is preferred securities.
- While preferred securities generally offer higher yields, there are several unique characteristics investors should know before allocating to the sector.
- Preferred securities are concentrated in the financial sector, carry increased credit risk (relative to financial bonds), and trade in two distinct markets.
- For more on our views on preferred securities, see today’s LPL Research blog, available at 12p.m. ET.
The S&P 500 Index gained 0.3% Monday, as once again gains in cyclical value sectors were offset by declines in technology and consumer discretionary. The S&P 500 has now traded in barely over a 1% intraday range over the past six sessions. First support for the index is at 4118.
LPL Research in the Media
LPL Financial Chief Market Strategist Ryan Detrick joined CNBC’s Squawk Box with Joe Kernen on Monday to discuss ‘Sell in May.’ You can watch the full interview here.
Time To Sell In May?
LPL Research notes some possible reasons for a pause in the rally and why any potential pullbacks won’t last very long. Learn more in this week’s Weekly Market Commentary.
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