A Market in Motion Stays In Motion
Stock market weakness continued in September after one of its best six-month rallies. Technology stocks pulled back after historic outperformance. COVID-19 continues to weigh on the global economy, as the United States looks to the elections.
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The stock market weakness has continued in September. At the same time, COVID-19 cases in Western Europe are spiking, and we wonder if an increase in cases in the United States may be next. LPL Research strategists discuss these global events plus the improving economic backdrop in the United States and the recent pullback in technology stocks.
The weakness continued
The S&P 500 Index fell for the fourth consecutive week for the first time since August 2019. According to the LPL Research strategists, after a 60% rally, some type of pullback would be perfectly normal, especially during late September, which historically has been a troublesome time for stocks. Given the continued improving economic data, however, this pullback doesn’t appear to be the start of another new bear market–it could very well be a standard pullback after a historic rally.
Cases spike in Europe
Western Europe has experienced a spike in new cases of COVID-19, which is having an immediate impact on its economic recovery. In March we observed a similar scenario, and the LPL strategists discuss why the likelihood of the United States following Europe’s trend may be increasing.
A great six months
The S&P 500 has gained nearly 47% in the six months since the March 2020 lows to become one of the best six-month rallies ever. Historically after huge gains, future returns a year later have been quite strong—higher seven out of eight times. In other words, an object in motion tends to stay in motion more often than not.
Tune in now
Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the US and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunes, Google Play, or Spotify.
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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
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All index data is from FactSet.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This Research material was prepared by LPL Financial, LLC.
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