Market Update: Tue, Nov 20, 2018 | LPL Financial Research

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Daily Insights

  • Stocks continue on path of least resistance. Devoid of clear catalysts to spur buying, investors are instead taking a more cautious view that has sustained major indexes’ recent downward momentum. Investors remained concerned about a Federal Reserve (Fed) that appears intent on continuing its rate-hike campaign despite several members acknowledging downside risks, along with an ongoing selloff in the technology sector. Lackluster earnings from several high-profile retail chains and skepticism on meaningful progress in U.S.-China trade talks are also dragging down investor sentiment.

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Market Update: Mon, Nov 19, 2018 | LPL Financial Research

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Daily Insights

  • Outstanding earnings season winds down. With 92% of S&P 500 Index companies having reported, third-quarter earnings growth is tracking to an impressive 28.1% year-over-year increase, the highest since Q4 2010 and 6.5 percentage points higher than September 30 expectations. Despite tariffs, S&P 500 earnings estimates for the next 12 months have only been reduced by 1.1% since October 1, less than the average earnings season decline in forward expectations. The overwhelming majority of companies have experienced none or only modest impact on their supply chains and costs from tariffs thus far. Revenue results have also been very good, supported by strong economic growth. S&P 500 revenue has increased 8.5% year over year, 1.1 percentage points above September expectations (though below last quarter’s 9.5% clip).Earnings-Dashboard-11.19.18
  • One step back at APEC. Global trade discussions took a step back over the weekend, as global leaders attending the Asia-Pacific Economic Cooperation (APEC) summit failed to agree on a joint statement from the meeting for the first time in 25 years. Reports this morning indicate the discord was around trade, and Vice President Mike Pence and Chinese President Xi Jinping took shots at each other’s policies in speeches at the meeting. Investors might have to wait for the G-20 summit at the end of this month for progress in trade talks, but APEC’s outcome could sour investors’ expectations for a deal in the near term. Still, we expect the U.S. and China to reach an agreement before significant economic damage is inflicted.

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Weekly Update— Brexit Back in the Spotlight

US: S&P 500 Index -1.6%, Dow -2.2%, Nasdaq -2.2%
Europe: STOXX Europe 600 -2.2%, German DAX -1.63% France CAC 40 -1.6%, U.K. FTSE 100 -1.0%
Asia: Japan Nikkei -2.6%, China Shanghai Composite +3.1%, Korea KOSPI  +0.3%
Rates/Commodities: 10-Year Treasury yield -12 basis points to 3.07%, WTI crude oil -6.23%, COMEX gold +0.3%

U.S. equities moved lower for the week, but ended on a high note as the S&P 500 Index broke a five-day losing streak on Thursday and then closed higher Friday as well, partly boosted by positive comments on U.S.-China trade talks. Oil snapped a record 12-day losing streak on Thursday, Continue reading

Market Update: Fri, Nov 16, 2018 | LPL Financial Research

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Daily Insights

  • S&P 500 snaps 5-day losing streak on Thursday. The S&P 500 Index rallied throughout the day yesterday, closing higher for the first time last Wednesday. The advance was led by the technology and energy sectors, which have been relative underperformers since the start of the correction, while the more-defensive consumer staples, utilities and real estate sectors lagged. The S&P 500 remains about 1% below its 200 day moving average, which may serve as resistance, along with the 2,814 level where the last two rallies have failed. On the positive side, we remain well above the intraday lows from late October (which should serve as potential support), and seasonally, we are in the strongest part of the year.

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Market Update: Thurs, Nov 15, 2018 | LPL Financial Research

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Daily Insights

  • Retail sales reverse two-month slide. Retail sales rose 0.8% in October, reversing a two-month slide from weather-related weakness and beating consensus estimates for a 0.5% increase. Retail control-group sales, which are used to calculate gross domestic product, climbed 0.3%, below consensus estimates of a 0.4% gain, showing that core retail spending was slightly weaker than expected. We still believe that the U.S. consumer is the healthiest in years, aided by fiscal stimulus and modestly accelerating wages, and strong consumer demand will drive output going forward.

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Market Update: Wed, Nov 14, 2018 | LPL Financial Research

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Daily Insights

  • Oil tumbles 7%, extends record string of declines. WTI posted its largest single-day decline in three years yesterday, extending its record losing streak to 12 days. The slide came after OPEC revised down its 2019 demand estimate by 500k barrels per day (bpd) while forecasting an “alarming” resurgence of non-OPEC supply, led by the U.S. The report likely underpins recent calls from Saudi Arabia and other cartel members to cut supply by 1+ million bpd when it meets in Vienna next month, but criticism from President Trump helped prices sustain downward momentum in Tuesday’s session. Losses have been mounting as traders fear a supply glut comparable to the one seen in 2014 may be forthcoming, and recent data has heightened worries that global growth may be moderating (gross domestic product out of Germany, France, and Japan contracted in Q3). However, traders are getting some of the blame with money managers’ combined bullish positions currently at 14-month lows, reflecting both an increase in short positions and a decrease in long positions, and U.S. high yield spreads-a gauge for monitoring credit risk in the energy sector-remain well off the late-2015 levels, a period also characterized by plunging oil prices and global growth concerns.

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Market Update: Tuesday, November 13, 2018

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Daily Insights

  • Stocks pause after back-to-back weekly gains. After rebounding from October’s volatility spike over the past two weeks, investors used negative headlines tied to a few bellwether firms in the U.S., along with political tensions in Europe and Washington as reasons to take some gains off the table yesterday. Equity flows went into defensive sectors, with growth-oriented technology shares bearing a brunt of the selling pressure. Stocks are rebounding this morning, however, with major U.S. indexes opening higher on the heels of bargain hunting and upbeat earnings from a major home improvement retailer.

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Market Update: Monday, November 12, 2018

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Daily Insights

  • Strong Q3 earnings season nearly in the books. With 90% of S&P 500 Index companies having reported, S&P 500 Index earnings growth is tracking to an impressive 27.9% year-over-year increase, the highest growth rate since the fourth quarter of 2010 and 6 percentage points above expectations as of quarter end. Beat rates of 77% and 60% for earnings and revenue are impressive, as is the amount of earnings upside. However, we are most impressed with the amount of revenue upside-tougher to generate-that has been generated over the past two weeks. Revenue growth is tracking to an 8.5% year-over-year increase, compared to 7.7% just two weeks ago. The strong top line performance, clearly boosted by a strong U.S. economy, is particularly impressive given there is no direct benefit from the lower corporate tax rate. The resilience of earnings estimates, despite tariffs, has also been impressive. S&P earnings estimates for the next 12 months have only been reduced by 0.8% since quarter end, less than the 5-year average decline during earnings season of 1.6% and the 10-year average decline of 2.1% (source: FactSet).

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Weekly Update—Midterm Rally Buoys Weekly Gains, China Woes Continue

US: S&P 500 Index +2.1%, Dow +2.8%, Nasdaq +0.7%
Europe: STOXX Europe 600 +0.5%, German DAX +0.1% France CAC 40 +0.1%, U.K. FTSE 100 +0.7%
Asia: Japan Nikkei +0.0%, China Shanghai Composite -2.9%, Korea KOSPI  -0.5%
Rates/Commodities: 10-Year Treasury yield -3 basis points to 3.19%, WTI crude oil -3.9%, COMEX gold -0.7%

Major U.S. indexes added to last week’s gains amid an eventful week that included midterm elections, a Federal Reserve (Fed) monetary policy meeting, another string of corporate earnings, and some key economic data releases. Continue reading