Scribd
Upload
33 views

75 State Street, 22nd Floor Boston, MA 02109 4707 Executive Drive San Diego, CA 92121 1055 LPL Way Fort Mill, SC 29715

Uploaded by

Joseph Robinson
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
33 views

75 State Street, 22nd Floor Boston, MA 02109 4707 Executive Drive San Diego, CA 92121 1055 LPL Way Fort Mill, SC 29715

Uploaded by

Joseph Robinson
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

75 State Street, 22nd Floor

Boston, MA 02109

4707 Executive Drive


San Diego, CA 92121

September 2, 2021 1055 LPL Way


Fort Mill, SC 29715

Dear Valued Investor,

The bull market continues, with the S&P 500 Index now up seven months in a row. Stocks have impressively gained
20% year-to-date, with the S&P 500 making 53 new all-time highs before the end of August—another new record. All
of this has happened with very little volatility, as the S&P 500 hasn’t had so much as a 5% pullback since last October.

We came into this year expecting a stronger economy and robust stock market, but even we are surprised at just how
resilient things have been. Earnings help drive long-term stock gains, and what we’ve seen from earnings so far in 2021
is a big reason stock returns have been so impressive. A record-breaking second quarter earnings season saw more than
86% of S&P 500 companies beat their consensus earnings estimates, the highest ever recorded and well above the 75%
five-year average. S&P 500 earnings are now 26% above pre-COVID-19 levels based on the 2021 consensus estimate,
helping to justify stocks at current levels.

Another reason stocks have been so strong is Federal Reserve (Fed) monetary policies. The Fed is expected to begin to
taper its monthly bond purchases (currently $120 billion), but it appears to be committed to leaving rates low for the
foreseeable future. The Fed likely won’t consider increasing rates until the employment picture improves significantly,
and it will be leery of quickly removing stimulus after the deepest recession of our lifetimes, especially if COVID-19 is
still influencing behavior. We believe this historic Fed accommodation will continue to be a tailwind for equities.

Worries are adding up though, even as stocks hit new highs. Supply chain disruptions are contributing to higher input
prices in select industries. There are concerns about the future of Afghanistan. The highly contagious Delta variant has
nearly 100,000 Americans nationwide currently hospitalized. And, China’s regulatory crackdowns could lead to further
bouts of volatility. As a result, domestic consumer confidence has taken a hit recently, which could lead to a weaker-
than-expected third quarter for the U.S. economy. However, if Delta concerns ease, any consumption that is lost in the
third quarter will likely be made up in the fourth quarter.

Additionally, late summer through early fall has been a seasonally volatile period for stocks historically. Although stocks
shook off the traditionally weak August, September is upon us—and this month is historically the worst of the year for
stock returns. Not to mention October is historically the most volatile month of the year for stocks. Also, the second year
of a bull market has historically seen stocks pull back after big gains in year one.

Looking ahead to the final four months of the year, we remain positive on stocks and the U.S. economy. However, stocks
haven’t pulled back 5% for nearly a year, and we believe investors should be on alert for potential seasonal volatility,
aiming to use it as an opportunity when stocks go on sale. They say the stock market is the only place where everyone
runs out of the store screaming when things go on sale. It’s good to have a plan in place when that sale comes along.

Please contact your financial professional with any questions.

Sincerely,

Ryan Detrick, CMT


Chief Market Strategist
LPL Research
This material is for general information only and is not intended to provide specific advice or recommendations for any indiv idual. 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 ind ex. 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.
All index data from FactSet.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completenes s or accuracy.

This research material has been 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

RES-858554-0821 | For Public Use | Tracking #1-05186398 (Exp. 09/22)

You might also like