LPL Research Market Signals Podcast

Goodbye Recession, Hello Elections

LPL Research

2020 is half over, and we look at where we’ve been and where we may be heading. The recession may be over, and the economy appears to be going the right way. And then there’s the election in November.

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The rally continues, as economic data suggests the recession may be over—or will be soon. Plus, 2020 is an election year and, although COVID-19 has dominated the headlines, the LPL strategists expect the election to begin gaining traction in the media soon.

What have you learned in 2020 so far?

What a year it’s been so far. The S&P 500 Index was down 20% in the first quarter, only to gain 20% in the second quarter. And the LPL strategists remind us that the previous leaders can continue to lead. Technology and growth had been strong heading into 2020, and they’ve only added to their impressive strength recently. Also, stocks are forward-looking, and they’re looking ahead to better economic times.

Good-bye recession

4.8 million jobs were created last month—a new record. Additionally, consumer confidence, manufacturing, and housing data all suggest the recession may be over. The LPL strategists note, however, this doesn’t mean economic output will get to where it was in February, which could take years in some cases. But the new trend in encouraging economic data suggests this recession may be over already.

Who will win the election? Watch stocks.

As we head closer to the election, how stocks are doing could be the best market signal to help determine who will win in November. As the LPL strategists note, the stock market has predicted 20 of the past 23 presidential election winners. Historically, if the S&P 500 Index were up three months before an election, the incumbent party has won. If stocks were lower three months before, the incumbent party lost. Additionally, the best scenario for stocks has been a split Congress. That may be what investors should be watching as we approach November.

Chart - Bond income has been declining for decades


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 #: 1-05029749 (07/21)