LPL Financial Research Publishes Investment Outlook 2020

CHARLOTTE, N.C. – July 14, 2020 – LPL Financial LLC, a leading retail investment advisory firm, independent broker-dealer and registered investment advisor (RIA) custodian, today announced that LPL Financial Research’s midyear report, “Midyear Outlook 2020”, is now available in an interactive digital version and as a downloadable PDF.  The report, “The Trail to Recovery,” contains investment insights and market guidance from LPL Financial Research through year-end 2020, a year marked by significant disruption due to the global impact of the COVID-19 pandemic.

The LPL Financial Research report shares that as investors face a challenging environment that may lead to more volatility, fundamentals remain critical to making effective investment decisions. Midyear Outlook 2020 provides updated views of current fundamentals, while discussing three primary pillars, or trail markers, for investing – the economy, stocks, and bonds. Key insights and forecasts discussed in the Midyear Outlook 2020 report include:

• Economy: Expected GDP contraction of 3 to 5 percent. The trajectory of the economic recovery remains uncertain, but based on the depth of the contraction and a multi-staged recovery, LPL Financial Research strategists’ 2020 base-case forecast calls for a 3 to 5 percent contraction in gross domestic product.
  
  
• Bonds: Historically low yields potentially ahead.  LPL Financial Research strategists believe the direction of interest rates may be higher over the rest of 2020.  LPL Financial Research’s year-end base case forecast for the 10-year Treasury yield is 1 to 1.5 percent, which would be the lowest year-end level on record if realized.
  
  
• Stocks: Upside potential limited through year-end: LPL Financial Research strategists believe the optimistic economic recovery scenario reflected in stocks may limit their upside potential over the rest of the year. The 2020 year-end S&P 500 Index target range is 3,250 to 3,300, based on a price-to-earnings ratio (PE) of just below 20 and a normalized earnings per share (EPS) number of $165.
   

What to expect

LPL Financial Managing Director and Chief Investment Officer Burt White said, “Although the economy appears to be bouncing back quickly now, the truth is it might take a long time to get back to the level of output we saw in early 2020. The final part of the economy’s comeback, like building a house, may take longer than we expect.”

“The rest of the year will continue to be challenging, with significant uncertainty that may lead to more volatility for the next few months,” said LPL Financial Senior Vice President and Chief Market Strategist Ryan Detrick. “LPL Research is looking ahead for new ways to face these challenges and prepare for better times. We continue to encourage investors to focus on the fundamental drivers of investment returns and their long-term financial goals,” Detrick said.

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, professionals, 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.

Securities and Advisory services offered through LPL Financial, a registered investment advisor. Member FINRA / SIPC.

*Based on total revenues, Financial Planning magazine June 1996-2020

Throughout this communication, the terms “financial advisors” and “advisors” include registered representatives and/or investment adviser representatives affiliated with LPL Financial LLC, an SEC registered broker-dealer and investment adviser.

Important Disclosures

Please see the LPL Financial Research Midyear Outlook 2020: “The Trail to Recovery” for additional description and disclosure.

The opinions, statements and forecasts presented herein are general information only and are not intended to provide specific investment advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Any forward-looking statements including the economic forecasts may not develop as predicted and are subject to change based on future market and other conditions.