LPL Financial Market Signals Podcast

Earnings Growth Ahead Despite Shutdown │ LPL Market Signals Podcast

LPL Research

In this week’s Market Signals podcast, our strategists look at another potentially solid quarter of earnings growth despite the government shutdown.

Over the last 20 [government] shutdowns, 12 months following the shutdown the S&P 500 was up 13% vs. the average return of approximately 8%. The historical data is telling us that it’s not crippling for the financial markets.

- John Lynch LPL - Chief Investment Strategist

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In this week’s Market Signals podcast, our LPL Research strategists discuss the government shutdown, the recent strong equity bounce, and the upcoming earnings season.

The current government shutdown is now the longest in history, at 24 days as of the recording of today’s podcast. Stocks have remained strong during this period. If it continues to drag on, however, it could have an impact on the economy.

Stocks bounced back nicely since the Christmas Eve lows, with the S&P 500 up nearly 10%. This is the best start to a year for stocks since 2003, and the LPL strategists state they’re encouraged by it. However, they also note that the 2,600 level on the S&P 500 won’t go down without a fight as this level was support back in the fourth quarter. It’s now expected to act as strong resistance.

This week’s podcast wraps us with a discussion of fourth quarter earnings, which are kicking off this week. After three consecutive quarters of 25% earnings growth, our LPL strategists expect another solid quarter of earnings. We expect mid-teens earnings growth in the fourth-quarter.

Chart - Strong but slower earnings growth on tap for Q4

S&P 500 earnings came in at greater than 25% each of the previous three quarters, but should drop to the mid-teens in the fourth quarter. This is still a solid number and one that suggests continued economic growth.

Tune into the podcast for more insights from LPL’s strategists on the latest news-making factors shaping the economic future. And make sure not to miss future podcasts by subscribing to LPL Market Signals on your favorite podcast platform.

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