LPL Market Signals: An Epic Week of Market-Moving Events

Market Blog

Thursday, July 29, 2021

In the latest edition of LPL Market Signals, the LPL Research strategists discuss some of the biggest surprises of 2021, including the strong year-to-date performance for the stock market and surprising recent drop in Treasury yields. Other surprises discussed include frosty U.S.-China relations, surging oil prices, the relentless growth stock rally, and the remarkable earnings rebound.

What’s Coming at the Fed?

The strategists also preview an epic week of potentially market-moving events. First, they preview the upcoming Federal Reserve policy meeting and discuss what they’re expecting to hear from the committee. LPL Research thinks the committee will reiterate its stance that accommodative monetary support is still necessary to support the uneven economic recovery. The committee will also likely state its case to continue to purchase $120 billion of bonds each month and keep short-term interest rates near zero.

Earnings Season Driving Forward

It’s also the busiest week of second quarter earnings season with about one-third of S&P 500 companies reporting results. Corporate America is off to a great start, putting S&P 500 Index companies in a position to potentially grow second quarter earnings as much as 80% year over year, compared with the 64% growth rate expected when earnings season began.

GDP on the Horizon

Finally, as if that wasn’t enough for one week, the strategists also preview this week’s second quarter gross domestic product (GDP) report, due out on Thursday. They take a horizon look at GDP and talk about what an eventual slowing of growth could mean for how market participants think about risk-asset exposure. LPL Research still likes equities over bonds today, but the expected deceleration in GDP growth, coupled with the robust risk-asset price gains to date should have investors moving to ensure their asset exposures are properly aligned with their risk tolerance.

Tune In Now

Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the US and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunesGoogle Podcasts, or Spotify and find us on the LPL Research YouTube channel.

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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.

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All index and market data from FactSet and MarketWatch.

This Research material was prepared by LPL Financial, LLC.

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