Weekly Market Commentary

The following market commentary is prepared for you by LPL Financial Research. Click here to view all LPL Weekly Commentaries on LPL.com.

Why It May Be Time To Take Advantage Of Higher Yields

September 26, 2022
Because the equity risk within our diversified asset allocation portfolios is still the largest contributor to total portfolio risk, we like the defensive properties that bonds could play on a go-forward basis. In the form of high-quality bonds, interest rate exposure has been a good diversifier to equity risk. And while that hasn’t been the case this year, we think at these higher interest rate levels, bonds can act like that diversifier again. 

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How Much Higher Can Rates Go?

September 20, 2022
Inflationary dynamics continue to surprise to the upside, and markets now expect the Fed to pursue one of its most aggressive rate hiking campaign in years. U.S. Treasury yields continue to move higher as well. We think we’ve seen the biggest moves higher in yields, but as long as inflationary pressures continue to surprise to the upside, interest rate volatility will likely remain. 

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Getting Jobs Market Back into Balance

September 12, 2022
Federal Reserve Chairman Jay Powell reiterated his warning that getting inflation under control will require some pain. Powell is likely making these warnings based on the arcane, clunky relationship between inflation and unemployment.

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September’s Calendar Cruelty for Stocks

September 6, 2022
Existing home sales fell 5.9% in July, the sixth consecutive month of declines as higher interest rates weigh on housing affordability and prospective buyers. As the housing market slowed, so did prices. 

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Earnings Recap: Still Hanging In There

August 29, 2022
Earnings growth of 6-7% doesn’t sound very exciting, but given the challenges corporate America has faced, we consider the nearly-complete second-quarter earnings season a resounding success. The numerous challenges last quarter included a slowing economy, intensifying inflation pressures, ongoing global supply chain disruptions, and a surging U.S. dollar.

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Home Sales Fall (Again). What’s Next?

August 22, 2022
The difficult 2022 for stocks may not get much easier because as we now wait for better news on the inflation front, we have to contend with a seasonally weak month of September. While we got some welcome news in Friday’s jobs report, more evidence of falling inflation will take time to materialize. The good news is a seasonally strong fourth quarter is right around the corner. 

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Is This the Start of a New Bull Market?

August 15, 2022
Investors cheered the two better-than-expected inflation reports last week, pushing the S&P 500 to 16% above its June 16 low and only 11% below its all-time high. After this rebound, the key question investors are asking is whether this is a bear market rally that will soon fizzle or the start of a new bull market.

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The Case for a U.S. Recession Weakens

August 8, 2022
Market strategists and pundits make the relationship between recessions and the stock market seem binary, but each economic contraction is different and has different effects on earnings. That said, it is still instructive to look at what stocks have historically done during recessions to get an idea of potential stock market scenarios.

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What a Week for the Stock Market

August 1, 2022
These days a Federal Reserve (Fed) policy meeting alone gets a lot of headlines and has market participants on the edge of their seats. Add to that the second straight quarter of negative gross domestic product (GDP) growth that exacerbated recession fears, the busiest week of earnings season, and important but sometimes under-the-radar inflation data, and last week was epic for market watchers.

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3 Factors That Could Change the Inflation Course

July 25, 2022
In recent months, inflation was lifted by supply bottlenecks, stimulus money, and loose monetary policy. As we navigate the uncharted waters of historically high global inflation, we can best understand the underlying trends by taking an individual look at the various components...

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Managing Market Volatility

July 18, 2022
A global economy that was already vulnerable to inflation from supply chain disruptions, tight labor markets, excess stimulus, and loose monetary policy came under more pressure when Russian aggression in Ukraine added sharply rising commodity prices and put Europe on the brink of recession. The effects have included renewed pressure on interest rates...

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LPL Research: Mid-Year Outlook 2022

July 12, 2022
Markets rarely give us clear skies, and there are always threats to watch for on the horizon, but the right preparation, context, and support can help us navigate anything that may lie ahead. So far, this year hasn’t seen a full-blown crisis like 2008–2009 or 2020, but the ride has been very bumpy. We may not be flying into a storm, but there’s been plenty of turbulence the first part of 2022...

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Constructive, Not Complacent: Lowering S&P 500 Target

July 5, 2022
Stocks have been unable to make up much ground since the June 16 lows, with a bear market rally amounting to only around a 4.3% gain in the S&P 500 Index since then (as of July 1). After the more than 6% rally the week of June 24 and the increasing optimism that came with that bounce...

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Relief At The Pump And For Portfolios

June 27, 2022
Let’s start with the single price that matters to consumers most: gas prices. Even if you drive an electric car, it would be hard not to notice the huge increase in gas prices over the past year. The AAA national average price for a gallon of gasoline just hit $5 for the first time ever...

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Bear Market: Q&A

June 22, 2022
The average bear market since 1950 has seen the S&P 500 lose an average of about 29% (including the near bear markets that saw declines of 19-20%). That suggests that if this bear market ends up around the average, that stocks may drop another 5% or so. 

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Is The 60/40 Portfolio Dead?

June 13, 2022
Bonds have typically seen gains during historical periods of equity volatility, although not always. But low bond yields in 2020 and 2021 and steep bond losses due to rising rates in 2022 have led many to speculate that the 60/40 portfolio is dead. But there’s something of a silver lining in the declines...

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The Economy Is Slowing But Not Shrinking

June 6, 2022
The U.S. economy grew 5.7% in 2021 after contracting by 3.4% the previous year. Last year consumer spending was extremely robust, particularly on consumer goods as consumers were still less inclined to spend on services. Goods spending contributed roughly 2.7 percentage points to the headline growth rate, the highest since 1955. 

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Looking Through the Clouds

May 31, 2022
At the risk of sounding cliché, making the case for stocks to stage a second half rally back to the prior highs requires investors to see through some heavy cloud cover. If you prefer another market cliché, it’s times like these when investors need a crystal ball. We fully acknowledge how tough it is to see the bull case for stocks right now, and a retest of recent lows is certainly possible, but this week we lay out the bull case for the second half of the year. It starts with inflation.

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Dawn of a New Era for Core Bonds

May 23, 2022
Core bond investors have experienced the worst start to the year ever. However tough this year has been so far though (and it has been tough), the potential for future returns has improved meaningfully, in our view. Starting yields tend to be a good predictor of future returns and have become more attractive in a number of markets recently. With yields on most fixed income markets moving sharply higher, now could be a good time to revisit fixed income markets.

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Corporate America Delivers, Market Attention Focused Elsewhere

May 16, 2022
First quarter earnings season was solid by just about any measure, but based on recent market behavior it’s obvious that in general market participants paid little attention. This is a macro-driven market, so it will likely take positive macro developments, i.e., better news on the inflation front, to turn stocks around. However, these results are impressive on their own and shouldn’t hurt the case for the bulls. The question is when will the micro stop getting drowned out by the macro.

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Have We Really Seen Extreme Pessimism Yet?

May 9, 2022
The sentiment indicators, which ask investors for their opinions, are signaling extreme levels of pessimism, but indicators based on actual market data have not reached levels that are normally associated with stock market bottoms. Overall, our assessment is that negative sentiment is a positive signal for equities, but not yet at such extreme levels that we believe it sufficient to add risk.

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Why You Shouldn’t Sell Your Stocks in May This Year

May 2, 2022
As we head into this seasonally weak period, keep a few things in mind. First, the S&P 500 Index has closed higher during the month of May in eight of the past nine years—so “Sell in June” might be more appropriate. In addition, various sentiment signals we follow are showing extreme caution and fear, potentially bullish from a contrarian point of view...

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