Daily Insights

Here comes March. The S&P 500 Index is off to its best start to a year after the first two months since 1991 (and 1987 for the Dow), and there could be more good news for bulls ahead. Over the past 10 and 20 years, March has been the S&P 500’s second-strongest month of the year, and April has been quite strong recently as well. Today on the LPL Research blog, we will take a closer look at March seasonality.

Stalling out? The S&P 500 is heading for a slight loss for the week as of Thursday’s close, but moves over the past few days have been historically small. The benchmark has moved an average of 0.1% on a closing basis this week, poised for the quietest week since July 2017. Technically, the S&P 500 remains beneath strong resistance from the 2,800 level, and we expect the first level of support near the 200-day moving average around 2,750. One thing is for sure: in the near-term, stocks are quite overbought. The S&P 500’s recent run has been especially strong: the index has closed above its 10-day moving average for 38 consecutive days – the longest streak in 9 years!

Personal spending slides. Personal spending dropped 0.5% month over month, its biggest monthly slide since September 2009, according to data released this morning. Today’s report reinforces the disappointing December retail sales report, which showed U.S. consumer activity slid the most in 10 years month-over-month. Global headwinds have weighed on consumer confidence over the past few months, so lower spending was somewhat expected (although the magnitude of the drop has been  surprising). However, we expect consumer spending to bounce back in the first half of this year amid lingering effects from fiscal stimulus, a patient Federal Reserve (Fed) and a strong rebound in equity markets.

Core PCE remains stable. Lower personal spending data wasn’t enough to derail core personal consumption expenditures (PCE), the Fed’s preferred inflation gauge. Core PCE grew 1.9% year over year in December, just below the Fed’s 2% target for the measure. Domestic pricing and wage growth remains manageable, showing that Fed policy is appropriate given economic conditions. We expect the Fed to pause rate hikes through the end of this year. However, we could see an additional rate hike, likely in the second half of this year, if economic growth picks up and inflation accelerates too quickly.

Click Here for our detailed Weekly Economic Calendar

Friday

• Core PCE (MoM, Dec)
• Markit US Manufacturing PMI (Feb)
• ISM Manufacturing PMI (Feb)
• University of Michigan Sentiment Index (Feb)
• Japan Consumer Confidence Index (Feb)
• Germany Unemployment Claims Rate (Feb)
• Eurozone Unemployment Rate (Jan)
• Eurozone CPI Report (Feb)

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

All 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 performance referenced is historical and is no guarantee of future results.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

The investment products sold through LPL Financial are not insured deposits and are not FDIC/NCUA insured.  These products are not Bank/Credit Union obligations and are not endorsed, recommended or guaranteed by any Bank/Credit Union or any government agency.  The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.

Index data obtained via FactSet

Member FINRA/SIPC

For Public Use – Tracking # 1-827712 (Exp. 2/20)