In this week’s LPL Market Signals podcast the strategists discussed the latest increase in cases of COVID-19 from the Delta variant. The uptick has their attention economically, although inventory replenishment and pent-up consumer demand still stand as key reasons they remain bullish on the economic recovery. Widespread lockdowns are extremely unlikely and peaks in cases in some of the regions hit earliest by Delta are encouraging.
A blowout second quarter earnings season is almost fully in the books and LPL Research sees continued strong earnings growth ahead. Positive guidance, rising estimates, sizable upside surprises on the revenue line, and the aforementioned need for inventory restocking all support a positive earnings outlook for the rest of 2021 and beyond.
LPL Research has raised its S&P 500 earnings per share forecasts by 5-6% on August 16 to $205 for 2021 and $218 for 2022. Higher earnings expectations were the primary driver of their raised year-end S&P 500 fair value target for 2021 to 4,650-4,700 (up from 4,400-4,450).
Finally, the strategists discuss differences between the current environment and the stagflation era of the 1970s in response to some investor concerns about recent high inflation readings. LPL Research continues to believe that elevated inflation pressures will prove transitory.
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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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