LPL Research’s Midyear Outlook 2022 Offers Financial Forecasts

Last Edited by: LPL Financial

Last Updated: July 28, 2022

Midyear Outlook 2022

The turbulence is real, but our research leads us to believe that there are effective ways to navigate these times successfully.

- Marc Zabicki

LPL Financial looks back to determine what’s ahead

The past year has been a bumpy ride for financial advisors and investors alike. With so many uncertainties, it’s nice to have some insights from an experienced team that can shed some light on what advisors and their investing clients might expect into the future. That’s exactly what readers will find in LPL Financial’s recently published “Midyear Outlook 2022: Navigating Turbulence.”

Available in an interactive digital version and as a downloadable PDF, the report provides a clearer picture of what may take place in the second half of 2022 through investment insights and market analysis from the LPL Research team. Below are a just a few key insights and market forecasts from this year’s outlook.

Inflation may be heading for a “cool down”

The Fed’s decision to raise interest rates sparked a lot of conversations around recession fears, but LPL’s research team anticipates rate hikes will “cool throughout this year, but the cool down period will be long and slow.” Likewise, supply chain improvements and a slowing housing market could “eventually ease inflationary pressures later this year and into 2023.”

Mark Zabicki, Senior Vice President of Research at LPL, shares more inflation insights in his statement:

“The issues we are facing are significant: inflation is at its highest level in decades, central banks are working to unwind more than a decade of extraordinary monetary support to fight inflation, and Europe’s two largest countries are at war. The turbulence is real, but our research leads us to believe that there are effective ways to navigate these times successfully.”

Policy & divided governments could have a surprising impact on stocks

It’s a mid-term year, which is more significant than most financial professionals may expect (unless they’re a financial history buff). Either way, mid-term years may signal both bad and good news for markets in the months ahead. Thankfully, the good news is expected after the bad news.  

  • The bad news: LPL Research notes that historically “[midterm years] not been kind to stocks.”
  • The good news: Every year since 1950, the S&P 500 has “been higher a year after every midterm election since … with an average gain one year later a very solid 14.5%. It looks like a divided government is in the cards, which markets have historically liked.”

Alternative investments may gain favor with investors

Volatility in the financial markets over the past two years have had an effect on how investors view their portfolios. Some may opt for alternative investments that provide the potential to add diversification and manage the risk to their financial futures. LPL Research, states, “We continue to believe our preferred alternatives implementations—event-driven strategies, market neutral strategies, and relatively conservative low volatility strategies—have the ability to act as a source of ballast during such periods of high volatility.”

LPL’s Financial strategists expect a rebound

On a recent episode of LPL’s weekly Market Signals Podcast, “It’s Time for Midyear Outlook 2022,” LPL Financial strategists Quincy Krosby, Jeffrey Roach, and Lawrence Gillum discussed more insights from this year’s report. After breaking down the first half of the year, which was characterized by “market volatility and turbulence” that may continue, strong corporate balance sheets and consumer resilience could put markets “in a good position to rebound.”

LPL is here for advisors, today and into the future

Despite the turbulence we’ve seen this year, one thing is certain: investing clients are still relying on their advisors to guide them. At LPL Financial, we supply our financial professionals with the resources and support they need to stay informed and competitive in the market. And, we offer the innovative technology and tools you need when managing your business today, and when growing your business into the future.

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in this material may not develop as predicted. Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. All indexes are unmanaged and cannot be invested into directly.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

All index data from FactSet.

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This research material has been prepared by LPL Financial LLC.