Follow-up to Stock Market Post-Rally │ LPL Market Signals Podcast

Subscribe to the Market Signals podcast series on iTunes, Google Play, Spotify, or wherever you get your podcasts.

In this week’s Market Signals podcast, the topic of discussion for our LPL strategists centers around what will potentially happen after the recent 20% stock market rally. Will the eventual stock market pullback be modest or something bigger?

The strategists note that after the large stock market rally coming off the December 24 lows, it’s reasonable for a pullback to occur. However, they don’t expect it to stay around 5%. Fundamentals remain quite solid, and market technicals are healthy.

Without question, global economic data is weakening. Concerns are also starting to show over US data. The good news, according to the strategists, is that the recent data isn’t necessarily a sign of recession. Rather, it points to more of an economic slowdown with eventual acceleration later this year.

Case in point: while recent jobs data has been weak, the strategists see it as a lagging indicator. More forward-looking data, like consumer confidence and housing, have spiked nicely over the past month.

Main Street confidence has taken a major hit. Much of it is due to continuing trade concerns, the global slowdown, market volatility from late last year, and the government shutdown. As a result, our LPL Research strategists say their proprietary Beige Book Barometer came in at its lowest level in seven years. Nonetheless, they think there’s better economic news or data ahead —particularly true should trade issues be resolved over the coming months.

The Beige Book Barometer is a diffusion index that measures the number of times the word “strong” or its variations appear in the Beige Book less the number of times the word “weak“ or its variations appear. When the Beige Book Barometer is declining, it suggests that the economy is deteriorating; when the Beige Book Barometer is rising, it suggests that the economy is improving.

Pessimism has increased rapidly on Main Street’s economic outlook, as our proprietary Beige Book Barometer has dropped to its lowest level since the European debt crisis.

Get the full story by tuning in to this week’s Market Signals podcast. Subscribe to the Market Signals podcast series on iTunes, Google Play, Spotify, or wherever you get your podcasts.

If you are a financial advisor, talk to a recruiter to learn how you can affiliate with LPL.

_______________________________________________________________________________________________

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

The investment products sold through LPL Financial are not insured deposits and are not FDIC/NCUA insured. These products are not bank/credit union obligations and are not endorsed, recommended or guaranteed by any bank/credit union or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.

Member FINRA/SIPC

For Public Use — Tracking #: 1-830978