Market Update: Monday, July 9, 2018

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Daily Insights

  • Solid jobs report helps solidify counter-balance to trade tensions. We continue to expect a solid overall economic backdrop, bolstered by fiscal stimulus, to overwhelm the dollar impact of tariffs in 2018 on the way to eventual trade deals between the U.S. and its major trade partners. Friday’s jobs report helps to solidify this thesis based on: 1) solid and better-than-expected June job creation (213K), in addition to positive revisions to the prior two months, 2) benign 2.7% wage inflation, and 3) an increase in the labor force participation rate, which we view as a positive economic signal.

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July Preview: Summer Bounce?

July is a month that usually doesn’t have a lot of news and many market participants are on vacation, but stocks tend to do well. “Wall Street might hit the beach, but stocks are going to work. In fact, over the past 10 years, only March has a better average return for the S&P 500 Index than July does,” explained LPL Research Senior Market Strategist Ryan Detrick. Continue reading

Will More Shareholder Payouts Get Financials Going?

One day is hardly anything to get too excited about, but the financials sector finally broke its record 13-session losing streak last Thursday after results from the second phase of the Federal Reserve’s (Fed) capital review offered some good news. As a reminder, banks subject to the review must meet certain minimum capital requirements in a simulated severe recession and credit market downturn scenario. Based on the results of that analysis, the Fed approves or rejects banks’ requests for share repurchases and dividend increases. Continue reading

Market Update: Monday, July 2, 2018

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Daily Insights

  • Shareholder payouts to generate interest in financials? Financials broke a record 13-session losing streak last Thursday with help from prospects for more capital to be returned to shareholders. Thursday’s results from the Federal Reserve’s capital plan reviews (including last week’s stress test) offered some good news. A total of 34 (of 35) institutions subjected to this process passed the review, with several having conditions attached and one–not totally unexpected–receiving an objection. An overall positive result, which was initially well received by market participants, was followed by a wave of dividend hikes and share repurchase announcements. After a disappointing first half, we expect the sector–the topic of our latest blog due out later today–to perform better over the rest of the year, and for increasing dividends and share repurchases to help garner renewed interest.
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Why Stocks Higher in May and June Is a Good Thing

May and June historically have tripped up stocks, which makes 2018 all the more interesting as both of those sometimes troublesome months were in the green. As LPL Research Senior Market Strategist Ryan Detrick explained, “When months that have been usually weak weren’t, that is a sign. In fact, when the S&P 500 Index has been up in both May and June, the rest of the year has been higher the past 11 times! Not to mention the full-year return has been lower only once (out of 22 times) going all the way back to 1950*.” Continue reading

Weekly Update – Stocks Drop as Trade Tensions Ratchet Higher

US: S&P 500 Index -1.0%, Dow -1.2%, Nasdaq -2.4%
Europe: STOXX Europe 600 -1.3%, German DAX -2.1%, France CAC 40 -1.1%, U.K. FTSE 100 -1.1%
Asia: Japan Nikkei -1.7%, China Shanghai Composite -3.2%, Korea KOSPI  -2.0%
Rates/Commodities: 10-Year Treasury yield -5 basis points to 2.85%, WTI crude oil +8.3%, COMEX gold -1.4%

Global equities moved lower for a second straight week amid escalating trade tensions between the United States and China. Continue reading