Outlook 2020: Bringing Markets Into Focus
Hindsight is 20/20, but finding clarity in future uncertainty can be fuzzy.
AT LPL RESEARCH, as we look forward to the year 2020 and a new decade, some key trends and market signals will be important to watch, including progress on U.S.-China trade discussions, an encouraging outlook from corporate America, and continued strength in consumer spending.
Trade risk, slower global growth, and the impeachment inquiry have garnered a lot of the headlines recently, but behind the scenes the U.S. economy has remained resilient. Economic data has been meeting lowered expectations, indicating an expansion that is still enduring. Most recently, third quarter economic growth was consistent with the long-term trend of this current economic expansion, which is now more than 10 years old.
We expect the U.S. economy to continue to grow in 2020 and support gains for stocks, although we are increasingly mindful of our position in the business cycle. At some point in the future, this record-long expansion will come to a close, leaving investors wondering what’s next. Against this backdrop, questions about the next potential recession and the 2020 U.S. presidential election continue to be top of mind for many investors. While we can’t see into the future, one thing we can predict is that uncertainty in the markets is here to stay. And we are here to help. We offer our Outlook 2020, your guide to preparing for this dynamic—and uncertain—market environment.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. The economic forecasts may not develop as predicted. Please read the full Outlook 2020: Bringing Markets Into Focus publication for additional description and disclosure. This research material has been prepared by LPL Financial LLC.
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The rally continued as the S&P 500 Index closed out May on the positive side. The disconnect between stocks and the economy generated widespread concern among some investors.
At the beginning of the first quarter corporate earnings reporting season, we noted the earnings bar probably wasn’t set low enough, given the abruptness of the shutdowns in March.
In spite of COVID-19 and weak economic data, the S & P 500 Index has rallied, and there are signs of improvement as the economy begins to reopen.
Stocks may have been due for a pullback after gains in late March through April and could potentially have further to fall.
As May began, investors continued to try to reconcile the strong rebound in stocks with the devastating economic damage from COVID-19.