CHARLOTTE, N.C. – Dec. 3, 2019 – Leading retail investment advisory firm and independent broker/dealer LPL Financial LLC today announced that its annual “Outlook 2020” is now available. View the new interactive version of “Outlook 2020” or download the printable version. The report, “Bringing Markets Into Focus,” contains investment insights and market guidance from LPL Research for 2020, a year that will bring a highly charged U.S. presidential election and a possible breakthrough in international trade and policy discussions. These and other critical factors outlined in the report are likely to influence the longest running bull market in U.S. history.
“We expect the U.S. economy to continue to grow in 2020, which we believe will support stock market gains, but we are increasingly mindful of the advanced age of the economic expansion and bull market. There will continue to be uncertainty in the markets, but we continue to believe there is a low likelihood of recession in the coming year,” said John Lynch, executive vice president and chief investment strategist, LPL Financial. “Our strategists are committed to delivering market insights that empower LPL advisors in their efforts to make informed, risk appropriate decisions suited to their clients’ unique financial goals. More Americans entrust advisors to provide financial advice than ever before. By focusing on the fundamentals and market signals, we believe investors can make these emotional decisions for their diversified long-term portfolios most effectively.”
The LPL Financial Research report emphasizes the following:
Policy: Progress on trade remains central to the 2020 outlook. Progress on U.S.-China trade discussions needs to come sooner rather than later if economic growth or corporate profits are going to improve in 2020. Based on recent signals from the yield curve and economic reports, LPL Research analysts report that they suspect the Federal Reserve (Fed) is in a wait-and-see mode as it gauges the impact of its 2019 rate cuts, which can take time to flow through to consumers and businesses.
Economy: Expected GDP growth of 1.75 percent. LPL Financial Research analysts expect 1.75 percent U.S. gross domestic product (GDP) growth in 2020, reflecting the potential for continued trade and geopolitical uncertainties amid the gradual slowing of the economy at this point in the economic cycle. Their forecast reflects the U.S.-China trade dispute dragging into the first part of 2020 and increased odds of recession in the latter months of 2020 or early 2021.
Bonds: Modest increase forecasted for longer-term yields. LPL Financial Research analysts’ year-end 2020 forecast for the 10-year U.S. Treasury yield is a range of 2 to 2.25 percent. Continued Fed flexibility should provide enough support to the economy to foster a modest increase in longer-term yields.
Stocks: S&P 500 Index appears fairly valued around 3,250–3,300. Based on expectations for better earnings growth in 2020, along with anticipated continued economic growth, LPL Financial Research analysts expect support for stocks at current valuations. Their 2020 year-end S&P 500 fair value target is 3,250–3,300, which is calculated on a trailing price-to-earnings ratio (P/E) of roughly 18.75 multiplied by their 2020 S&P 500 earnings per share forecast of $175. LPL Financial Research analysts believe mild inflation and still-low interest rates support these valuations.
About LPL Financial
LPL Financial is a leader in the retail financial advice market and the nation’s largest independent broker-dealer*. We serve independent financial advisors and financial institutions, providing them with the technology, research, clearing and compliance services, and practice management programs they need to create and grow thriving practices. LPL enables them to provide objective guidance to millions of American families seeking wealth management, retirement planning, financial planning and asset management solutions.
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*Based on total revenues, Financial Planning magazine June 1996-2019
Please see the LPL Financial Research Outlook 2020: “Bringing Markets Into Focus” for additional description and disclosure.
The Standard & Poor's (S&P) 500 Index tracks the performance of 500 widely held, large-capitalization US stocks. All indexes are unmanaged and cannot be invested into directly.
The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. Any economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All investing involves risk including loss of principal.