Market Update: Tuesday, July 17, 2018

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Daily Insights

  • Solid week for economically-sensitive fixed income. High yield, emerging markets debt (EMD), and bank loans all performed well (as measured by the Bloomberg Barclays Capital High Yield, JP Morgan Emerging Markets Bond Global, and the S&P/LSTA US Leveraged Loan indexes, respectively) last week alongside solid equity market returns. The continued recovery in EMD bodes well for trade tension fears, as the asset class was previously hit hard by concerns over trade skirmishes and a strengthening dollar. Investment-grade corporates also continued to recover, as fears about interest rate risk and anticipated heavy issuance due to merger and acquisition activity are relenting after pressuring the asset class early in the year.

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Build Out Your Midyear Outlook Suite

LPL Research has released the Midyear Outlook 2018: The Plot Thickens, and our Chart Book is an excellent addition to our suite of Midyear Outlook material. The Chart Book compiles the data and visuals to highlight the top takeaways from the publication. Take a look at what LPL Research thinks may be in store for the economy, stocks, and bonds—along with our investment recommendations for the rest of 2018. Get your copy of the Chart Book today! Continue reading

Market Update: Monday, July 16, 2018

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Daily Insights

  • Retail sales gain in June. Retail sales grew for a fifth straight month, rising 0.5% in June to match consensus expectations. Initial figures for May reported last month were revised higher, from 0.8% to 1.3% to mark the largest growth rate since September 2017. Eight of 13 sub-groups within retail sales gained month over month, confirming a broad-based pickup in consumer activity. However, while consistent gains in retail sales show the health of the consumer amid a strengthening economy, control-group prices, which are used to calculate GDP, painted a somewhat less encouraging picture, remaining unchanged month over month at 0.4% (matching consensus expectations). Despite stagnant control-group prices, U.S. consumer demand remains robust as spending continues to accelerate following the first quarter slowdown.

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Weekly Update – Investors Shrug Off Geopolitics, Push Stocks Higher

US: S&P 500 Index +1.5%, Dow +2.3%, Nasdaq +1.8%
Europe: STOXX Europe 600 +0.7%, German DAX +0.4%, France CAC 40 +1.0%, U.K. FTSE 100 +0.4%
Asia: Japan Nikkei +3.7%, China Shanghai Composite +3.1%, Korea KOSPI  +1.7%
Rates/Commodities: 10-Year Treasury yield +1 basis points to 2.83%, WTI crude oil -4.1%, COMEX gold -1.1%

Investors shrugged off signs of slowing trade growth in China and a somewhat contentious NATO meeting to push global equities higher this week. Cyclical sectors such as technology and industrials led the U.S. advance; Continue reading

Market Update: Friday, July 13, 2018

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Daily Insights

  • Nasdaq new highs. Yesterday the Nasdaq closed at a new all-time high, while the S&P 500 Index closed at its highest level since February 1, 2018. We continue to be impressed with overall market breadth, as many stocks are participating in the move; evidenced by both the NDX (Nasdaq) and NYSE Advance/Decline (AD) lines marking new highs. Various other AD lines are very close to making new highs as well. We’ve found that AD lines tend to peak months (if not years) ahead of major indexes and this continued strength is another reason we remain bullish on equities over the rest of 2018.

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Market Update: Thursday, July 12, 2018

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Daily Insights

  • We have raised our 2018 S&P 500 earnings forecast. The solid profits backdrop led us to increase our S&P 500 Index earnings forecast for 2018–from $152.50 per share to $155–in our Midyear Outlook 2018: The Plot Thickens publication. While this forecast may prove to be conservative, we prefer to be below consensus, which is around $160, due to the potential for further U.S. dollar strength, wage pressures, and tariff-related costs. A target price-to-earnings ratio of 19 gets us to our year-end fair value target range for the S&P 500 of 2900-3000, representing a potential double-digit return for the year. Through July 11, the S&P 500 has returned 4.8% year to date.

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