On the Recession Watch. With the S&P 500 Index at record highs, our outlook remains optimistic, but we don’t want to be complacent. We take a look at some of our favorite leading indicators to see what they say about the economic expansion and its accompanying bull market. Listen to this week’s Market Signals podcast.
More negative headlines. U.S. stocks are lower this morning after U.S. lawmakers passed a bill in support of Hong Kong protesters, leading China to threaten retaliation if the bill becomes law. A deteriorating relationship with China could be an obstacle for the United States and China’s trade discussions, as both nations try to find common ground in a limited trade agreement. Stocks could be especially vulnerable to negative headlines these days after their persistent climb back to record highs. The S&P 500 has notched 10 record-high closes over the past four weeks, including four straight through November 18.
Fed minutes release. Investors will have another important report to parse through later today, when minutes of the Federal Reserve’s (Fed) October 30-31 meeting are released. The Fed decided on a 25 basis point (0.25%) rate cut in that meeting, but Fed Chair Jerome Powell hinted in his post-meeting comments that this could be the last rate cut for a while. The Fed minutes should give more context on policymakers’ views of the economy and future policy, as well as what it could take for those views to change.
Don’t fear record highs. It’s human nature to get nervous when market conditions are too calm, especially with an uncertain outlook and an aging bull market. However, we urge investors not to lose sight of their goals as stocks pause near record highs. On the LPL Research blog, we’ll look at the S&P 500’s historical returns after reaching all-time highs, and show why we would recommend that investors stick to their investing plans in times of volatility and calm.
Thanksgiving schedule. We will not host the LPL Research Morning Call or publish a blog Friday, Nov. 29. We will publish the Daily Market Update as usual. Also, we will not record a Market Signals podcast the week of Nov. 25. Happy Thanksgiving!
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