Friday, June 25, 2021
Top Story
Maintaining value overweight
Growth has outperformed value handily over recent months, but we still believe that the current environment supports value stocks. We take a look at those fundamental factors, as well as the technical chart later today on the LPL Research blog, available at 12:00 p.m. ET.
Daily Insights
U.S. equities point toward a positive open following Thursday’s strong rally
- The Dow Jones Industrial Average is leading U.S. markets higher today as cyclical names rebound from last week.
- European equities are slightly lower through midday trading as German consumer confidence jumps to its highest reading since August 2020 and UK consumer sentiment reached its highest level since March 2020.
- Asian markets ended their trading sessions higher with both the Hong Kong (Hang Seng) and China (Shanghai Composite) markets stand out; South Korean (KOSPI) stocks close at a record high.
Fed’s preferred measure of inflation accelerates but in line with expectations
Core personal consumption expenditure (PCE) inflation rose 0.5% month over month and 3.4% year over year, approximately in line with economists’ consensus estimates.
- Base effects (the numbers rolling off from last year) are still having some impact on the year-over-year number.
- Despite the increase, the absence of a surprise to the upside may help reassure market participants that they’re not missing anything.
- While inflation may continue to run higher than the last economic cycle for an extended time, we believe that currently elevated levels will gradually start to normalize as the price impact of reopening begins to settle.
Technical update
The S&P 500 Index closed at a new record high Thursday; however, participation continues to deteriorate under the surface. In fact, Thursday’s new high occurred with less than half the stocks in the index trading above their 50-day moving averages, the first time this has occurred since December 1999.
Inflation And What the Fed Is Saying
Inflation seems to be on the rise, but LPL Research believes there are good reasons to think it will be transitory. Learn more in this week’s Weekly Market Commentary.
What Does The Fed Say?
On this week’s LPL Market Signals Podcast, LPL Research discusses why a more hawkish Federal Reserve shouldn’t have been much of a surprise, the sharp earnings revisions higher, and reasons for downgraded technology.
IMPORTANT DISCLOSURES
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 # 1-05160345