Raising Economic And Market Forecasts…Again

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Strong March jobs report

The U.S. labor market grew the most in seven months in March, as the economy added 916,000 jobs, trouncing the median economists’ estimate for a 660,000 gain (source: Bloomberg). Segments of the labor market most dependent on in-person interaction saw the greatest gains, notably hospitality and leisure. We expect to see bigger job gains in the coming months, potentially over one million per month into the summer, helping to close the gap on the more than eight million jobs still needed to get back to the pre-pandemic peak.

Raising U.S. and global economic growth forecasts

An accelerating vaccine rollout, American’s desire to resume somewhat normal lives, and massive stimulus set the stage for booming growth in the U.S. economy this year. Our 2021 U.S. gross domestic product (GDP) growth forecast goes from 5—5.5% to 6.25—6.75%. A stronger U.S. growth outlook pushes LPL Research’s expectations for growth in emerging markets and globally higher as well.

Raising our 2021 S&P 500 Index earnings estimate

With more economic growth comes more revenue opportunities for corporate America. Companies have been doing a tremendous job of adapting the pandemic, innovating, and generating efficiencies. We are leaving our year-end fair value target for the S&P 500 Index unchanged at 4,050—4,100 for now in anticipation of lower stock valuations as interest rates rise.

Raising our year-end target range for the 10-Year U.S. Treasury yield

Stronger economic growth and more stimulus spending may put further upward pressure on yields. We have raised our forecast for the U.S. 10-year Treasury yield from 1.25—1.75% to 1.75—2.00%.

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 Podcasts, or Spotify and find us on the LPL Research YouTube channel.

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IMPORTANT DISCLOSURES

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. 

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