Is the Recession Over?
The recession may be over, according to recent economic data. The S&P 500 Index had its best 100-day rally ever, gaining off March 23 lows. Q2 corporate earnings were down, but better than estimates, and forward guidance has been upbeat.
The economic data continues to improve, suggesting the recession is probably over or may be quite soon. The stock market is suggesting this as well, with the S&P 500 Index near a new all-time high. This week in the LPL Market Signals podcast, LPL strategists put in perspective the huge rally, a strong second quarter earnings report card, and why the recession is likely over.
Is the recession over?
The majority of the economic data we’ve seen recently has been quite strong, likely suggesting the recession is probably over. The LPL strategists note that the surge in productivity is consistent with the end of previous recessions, while retail sales are already back to new highs. Yes, the economy still has issues, as nearly 1 million people filed for initial jobless claims last week, but this was the first time in 21 weeks it cracked 1 million.
Best 100 days ever
The S&P 500 just had its best 100-day rally ever, coming off the March 23 lows. Over the past 100 trading days, the index gained more than 50%, besting the 45.9% off the 2009 lows. As the LPL strategists note, historically, big 100-day rallies experienced continued strength, with the S&P 500 higher a year later 17 of 18 times.
A solid earnings season wraps up
Second quarter earnings season is winding down, and although earnings will be down more than 30% year-over-year, the end result will be much better than the estimates. In fact, corporate America gave surprisingly upbeat guidance for the future, something the LPL strategists note may be a great sign for the recovery. Also, recent economic data has been historically strong relative to expectations, again suggesting the recovery may be alive and well.
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.
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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