Potential Government Shutdown Adds to Drama | LPL Financial Market Signals Podcast
In this week’s podcast, LPL Research strategists discuss the effects on the market and the economy of a potential government shutdown, another rate hike, the Brexit and China issues, and December’s bad start for equities.
The medium return on the S&P going back to the mid-1970s is essentially flat during a government shutdown. History tells us that the markets tend to take it in stride.
In this week’s Market Signals podcast, our LPL Research strategists discuss four major topics creating drama in both the market and the US’s economic outlook: a bad December start for equities, another rate hike, the Brexit and China issues, and a potential government shutdown.
First, we’ve just experienced the worst start to the month of December for equities since 1980. Nonetheless, LPL’s strategists see reasons to be on the lookout for a potential “Santa Claus” rally. Stocks tend to do well the second half of December. In addition, various measures of market sentiment are flashing extreme pessimism. That could mark a contrarian low.
Second, the Fed is set to announce an interest rate hike on Wednesday. Another hike is likely but may not occur until the first half of next year.
Brexit continues to make the news headlines, as the situation gets messier. At the same time, China’s economic growth is slowing down. Still, 5% is impressive for a country that large.
The fourth topic is the possibility of a government shutdown later this week. The good news is that stocks have historically taken shutdowns in stride and this could be the case again.
December is known for being one of the best months of the year, but it is interesting to note that the majority of the gains for the S&P 500 tend to happen the second half of the month. Suggesting there is still time for Santa to come in 2018.
Listen in to the full Market Signals podcast by LPL Financial to hear more, and make sure not to miss future podcasts by subscribing to LPL Market Signals on your favorite podcast platform.
If you are a financial advisor, talk to a recruiter to learn how you can affiliate with LPL.
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.
The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1928 incorporates the performance of predecessor index, the S&P 90.
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.
For Public Use — Tracking #: 1-803594