Thursday, May 27, 2021
New Street View Video: Do You Have Your Mind Right?
LPL Financial Director of Research Marc Zabicki lists three practical steps for mitigating the potential havoc irrational influences can have on investment decisions.
U.S. markets point toward a slightly mixed open following Wednesday’s modest gains
- The S&P 500 Index is marginally higher while the Nasdaq Composite is down slightly in early trading.
- European equities are higher in midday trading, led by strength in France.
- Asian markets ended mixed with China (Shanghai composite) a standout performer, finishing up 0.4%.
Jobless claims fall to another pandemic low
The U.S. Department of Labor reported that initial claims for unemployment fell to 406,000, a new pandemic low and below expectations of 425,000. The improvement in jobless claims in recent months is encouraging and has brought filings closer to pre-pandemic levels, but the U.S. economy still needs to create another 8 million jobs to get back to even which will take some time to achieve.
Republicans deliver $928 billion counteroffer on infrastructure stimulus
- Public offers from Democrats and Republicans are still about $700 billion apart, making a bipartisan deal unlikely.
- However, reports suggesting that the Biden administration may be comfortable with a deal with a deal in the $1 trillion range keep hopes for a bipartisan deal alive.
- The final tally of infrastructure and social spending to be passed later this year will likely exceed $2 trillion, regardless of the mix of bipartisanship and reconciliation used to pass Congress.
- Pressure from moderate Democrats will likely force President Biden’s proposed tax increases to be pared back significantly.
Checking the Gauges: Economic Surprise Indexes
- It appears economic conditions are getting better overseas based on how frequently economic data is beating economists’ forecasts.
- This improvement has helped steady the foundation in many non-U.S. equity markets, and caused us to improve our outlook for developed non-U.S. stocks.
- High economic expectations may prove to be a more formidable hurdle here in the U.S., though we still believe U.S. stocks should make up the majority of equity portfolios.
- Even though economic expectations are being more readily exceeded overseas, it’s tough to overlook U.S. companies’ innovation and profitability advantages.
We discuss these topics today on the LPL Research blog, available at 1p.m. ET.
The S&P 500 Index continues to churn in the range between 4056 and 4238, where it has traded since early April. With some modest signs of momentum and participation deteriorating under the surface, the large cap index may be falling into a range similar to the Russell 2000, which has seen small caps largely stagnant since early February.
Stock Market Gains Likely To Slow
LPL Research explores how, as this bull market gets a little older, the pace of stock market gains will likely slow but does not expect pullbacks to last very long. Learn more in this week’s Weekly Market Commentary, available on the Resource Center, Marketing on Demand, and Broadridge.
To Taper or Not to Taper: That Is the Question
On the LPL Market Signals podcast, Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder dig into why tapering is a normal part of the recovery process and why they think the inflation threat remains transitory.
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