LPL Research Market Signals Podcast

Dissecting the Disconnect

LPL Research

LPL Financial Research strategists explore some differences between the stock market and the economy in an attempt to explain the disconnect and also discuss the latest economic data.

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The economy continues to surprise to the upside, while the S&P 500 Index is about 1% from new all-time highs. Still, the disconnect between an economy that is nowhere near its previous peak has many investors confused about why stocks are back near recent highs. This week on the LPL Market Signals podcast, the LPL strategists discuss this along with some of the other recent economic data.

The disconnect continues

Yes, stocks are near highs and the economy is still recovering off of historically low levels. Yet, as the LPL strategists noted, it is important to remember that the S&P 500 is more manufacturing based, while gross domestic product (GDP) is more services based. Given services were hit harder, it will be harder for services to come back due to social distancing. Also, the S&P 500 is more global, while GDP is more domestic. As parts of the globe improve before the United States, this is another tailwind.

Maybe it isn’t so odd

What might surprise many investors is the S&P 500 gained during 7 of the past 12 recessions. As the LPL strategists noted, this recession is quite unlike any we’ve seen before though, but with stocks up double digits since this recession started, it isn’t as abnormal as some think.

Chart - Stock Returns During Recessions

Economic round up

Last week saw better-than-expected services, manufacturing, and jobs data. As the LPL strategists noted, although much of the real-time economic data is weakening, we were quite surprised how strong the data came in last week. All of this further confirms our views that the recession is likely over.

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 iTunesGoogle Play, or Spotify.




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.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

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. 


For Public Use — Tracking #: 1-05042666 (08/21)