Iran retaliates. U.S. stocks are higher this morning after a volatile night in the U.S.-Iran conflict. S&P 500 Index futures dipped 1.5% and global markets swung after Iran fired several ballistic missiles at U.S.-Iraqi military bases Tuesday night. S&P 500 futures recovered their losses overnight on news that there were no American casualties in the incident, but tensions remain high in the Middle East. Continue reading
U.S. manufacturing health continued to slide, despite the United States and China moving closer to a limited trade agreement.
The Institute for Supply Management’s (ISM) manufacturing Purchasing Managers’ Index (PMI) fell to 47.2 in December 2019. As shown in the LPL Chart of the Day, December’s reading was the lowest of the economic cycle, and its fifth straight month in contractionary territory (below 50). Continue reading
Stocks shrug off tensions. U.S. stocks opened little changed, shrugging off heightened geopolitical tensions after the U.S. airstrike in Iran. Investors are still evaluating what the attack could mean for financial markets and how Iran could respond. However, for now, it looks like U.S. investors think escalating tensions won’t materially impact fundamentals (a view we agree with at this point). Continue reading
The U.S. airstrike that killed the top Iranian military commander last week was a major escalation in Mideast tensions.
In fact, it would be difficult to overstate the geopolitical significance of this action. Iran likely will retaliate, possibly with attacks on American military personnel overseas.
We cannot dismiss the risk that the situation may escalate further into a broader conflict. However, from a markets perspective, we want to be careful not to overstate the potential impact. History shows that stocks have largely shrugged off past geopolitical conflicts. Continue reading
Geopolitical tensions flare. U.S. stocks are lower this morning, extending Friday’s decline on news of a U.S. airstrike that killed a top Iranian military official. The attack was a major escalation in Mideast tensions, and it could have significant geopolitical implications. We cannot dismiss the risk that the situation expands into a broader conflict, but at this point, we think it’s unlikely to have a material impact on U.S. economic fundamentals or corporate profits. Continue reading
It was the best year for stocks (S&P 500 Index) since 2013 and the best year for bonds (Bloomberg Barclays U.S. Aggregate Bond Index) since 2002. The diversified investor had an especially good year: A hypothetical 60/40 portfolio with 60% in S&P 500 stocks and 40% in a diversified portfolio of bonds would have posted its best annual performance since 1997. Continue reading
Stocks lower on airstrike news. U.S. stocks are lower this morning as global markets react to a U.S. airstrike in Iran that killed a top Iranian military official. The strike could escalate tensions in the Middle East, curbing risk appetite in the short term and potentially hindering a frail global economic recovery. WTI crude oil prices have jumped to the highest level since May on speculation that tensions could lead to disruption in the global flow of oil. Continue reading
The inverted yield curve was the biggest story of 2019 in the bond market. Historically, when long-term bond yields fall below short-term yields, as the 2- and 10-year Treasury yields did in August, recessions have tended to follow, though with wildly varying lead times. Thankfully, the yield curve has normalized since then as the 10-year yield has rallied. Continue reading
A new year. It’s a new year for U.S. stocks, which are higher amid headlines on new monetary stimulus measures in China. The People’s Bank of China cut the country’s reserve requirement ratio for banks, releasing a wave of cash into the financial system in an effort to boost lending. Stocks are also benefiting from hopes the United States and China will sign a limited trade agreement January 15. Continue reading
It’s the last day of the decade, so we thought we’d do our own “decade challenge” for the S&P 500 Index.
After all, it has been an unprecedented 10 years for financial markets. At the end of 2009, the S&P 500 was nine months into what would be the longest bull market on record. Since then, the benchmark has almost tripled, riding a wave of economic growth, improved earnings, muted inflation, and central bank accommodation. Continue reading