LPL Financial Market Signals Podcast

S&P 500 Bounce and a Pause │ LPL Market Signals Podcast

January 28, 2019

LPL Research

This week’s LPL Market Signals podcast focuses on the S&P 500 bounce, the end of the government shutdown, and another potential rate hike.

Technical analysis says, ‘previous resistance should now be support,’ so now we’re flirting back up to that range, and a pullback could be perfectly normal.

- Ryan Detrick – LPL Senior Market Strategist

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In this week’s Market Signals podcast, our Research strategists discuss the recent market bounce, the effects of the US government reopening, and the upcoming rate policy announcement from the Federal Reserve Bank (Fed).

The S&P 500 staged a furious bounce since the lows of December 24th, adding nearly 12%. Putting it in perspective, the LPL strategists note that the S&P 500 Index gained approximately 1.5% each of four consecutive weeks. The last time that happened was just after the March 2009 lows.  

After a record 35 days, the US government’s partial shutdown is over. During that time, the S&P 500 added 10.3% — the largest return ever for stocks during a shutdown. There have now been six consecutive shutdowns in which stocks gained. However, the government is only open for three weeks as negotiations over border security continue.  

Lastly, our strategists discuss the Fed’s announcement on interest rate policy scheduled for this week. Since December 2015, rates have been hiked nine times. With the overall global economic backdrop deteriorating, the strategists expect some type of a pause to happen.  

Chart - Futures Traders Call Federal Reserve's Bluff

One of the big issues late last year was the Federal Reserve Bank (Fed) saying it would hike rates next year more than what market participants expected. This disconnect led to much of the weakness equities saw late last year. It appears the Fed has now become much more ‘dovish’ – meaning they won’t hike rates as much as earlier expected. Having the Fed and market participants start seeing more eye-to-eye is a big reason for the 2019 equity strength.

To get our Research strategists’ full perspective on these issues, tune in wherever you get your podcasts.

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