Friday, May 21, 2021
LEI Growth Continues Its Bounce
- The Conference Board released its Leading Economic Index (LEI) report for April on Thursday, showing the series rose 1.6% month over month.
- This represents the second straight month in which the index bounced strongly, following a weak winter.
- In fact, this marks a new all-time high for the nominal index, surpassing the prior peak from January 2020 just before the onset of the recession.
- Strong breadth among the component indexes leaves us very optimistic about the economic trajectory and the potential for a near-term reacceleration.
- We examine the data release, as well as its implications for future economic growth, in further detail on the LPL Research blog, available after 12p.m. ET.
U.S. equities open in the green following Thursday’s positive close amid initial jobless claims
- S. stocks snapped a three-day losing streak yesterday.
- The S&P 500 Index, Dow Jones Industrial Average, and Nasdaq Composite are at least 0.3% higher this morning.
- European markets are mostly higher through midday trading with the Euro Stoxx 50 up 0.5%.
- Asian markets finished mixed with the Nikkei (Japan) up almost 0.8% and the Shanghai Composite (China) down over 0.5%.
A very quiet day
There aren’t many major headlines today, but here are a few things that caught our attention.
- Continued discussion around inflation, tapering, infrastructure, and a historically strong earnings season wrapping up are in most conversations.
- Global Flash Purchasing Managers’ Index (PMI) showed strong services data out of the Eurozone, while the United Kingdom saw improved manufacturing and extremely impressive retail sales.
- Japans Flash PMIs showed some weakness, with a deeper contraction in services.
- The United States is willing to accept at 15% global minimum tax rate, lower than the earlier proposal of 21%.
Market breadth remains strong—the rotation towards value sectors hasn’t damaged overall market breadth as over 70% of S&P 500 stocks remain above their 50-day moving average and 90% above their 200-day moving average. Less leadership from mega-cap names can weigh on index returns, but has only a marginal impact on breadth. The economic rebound continues to support a broad range of stocks, which is often a sign of a healthy market.
Economy Picking Up Speed
LPL Research explains why inflation is making headlines and why investors should not be overly concerned. Learn more in this week’s Weekly Market Commentary
Inflation, Inflation, Inflation
On the LPL Market Signals podcast, Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder dive into the hotter than expected recent inflation data and explains why massive inflation down the road is unlikely.
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