DAILY INSIGHTS

The day after. Stocks in the United States opened higher on the day after the S&P 500 Index lost 5.9%. Spikes in new COVID-19 cases, worries over a cautious Federal Reserve, small retail traders’ excitement over weak balance sheet companies, and historically overbought conditions were all factors. Europe is up nicely, and Asia was mixed. Calm is in the air, as there are no major new events moving markets so far today.

Worst day since March. Stocks sold off hard Thursday, with the S&P 500 having its worst day since March 16 and its first three-day losing streak since early March. After a 44% rally, we think a pullback would be well deserved. We show why historically overbought markets tend to occur near the start of bull markets, not the end, in today’s LPL Research blog.

COVID-19 news. Confirmed US cases rose 1.14% yesterday, matching the week-ago total and giving evidence that the downward trend may be flattening out. The biggest week-over-week increases came from Arizona (4.7%), Arkansas (4.3%), and Alabama (3.9%). Houston may re-impose stay-at-home orders after Texas reported its highest one-day tally of new cases. Cases in Germany are rising while falling steadily in the United Kingdom. Tokyo has moved to the final stage of its reopening plan (Source: COVID-19 Tracking Project).

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 may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites 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.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Value investments can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time.

All index and market data are from FactSet and MarketWatch.

This Research material was prepared by LPL Financial, LLC.

Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).

Insurance products are offered through LPL or its licensed affiliates.  To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.

• Not Insured by FDIC/NCUA or Any Other Government Agency
• Not Bank/Credit Union Guaranteed
• Not Bank/Credit Union Deposits or Obligations
• May Lose Value