Market Update: Wed, Apr 29, 2020

Market Update: Wed, Apr 29, 2020

April 29, 2020
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Market Update: Wed, Apr 29, 2020 | LPL Financial Research

DAILY INSIGHTS

 Stocks up on Fed day. After Tuesday’s gains faded late in the session, stocks opened solidly higher this morning ahead of the Fed’s policy announcement scheduled for this afternoon. Market participants also have a wave of earnings news, first quarter gross domestic product (GDP) report, and positive news on Gilead’s COVID-19 treatment to digest. Asian markets were mostly higher overnight with Taiwan and Australia seeing sharp gains. European markets are mostly higher in midday trading.

GDP contracts the most since 2009. US GDP growth in the first quarter contracted an annualized 4.8% according to the initial estimate released this morning. The contraction provides added confirmation that the economy likely entered a recession in March. Markets will likely discount the backward-looking data, and even the much larger contraction expected in the second quarter, remaining focused on the timing and pace of the economy reopening.

The Fed is on deck. The Federal Reserve is set to announce its latest interest rate policy, but it is widely expected to leave the benchmark rate at 0%–0.25% and make very little change to the policy statement. What the Fed says about the state of the economy later in 2020 is going to be key. Do they see a quick recovery or not? Also, focus will be on future asset purchases and expanding lending facilities.

Have stay-at-home growth stocks peaked? The most expensive growth stocks (trailing price-to-earnings ratios over 50) have rallied sharply during the first four months of the year, even as the broad market declined. Much of that strength has been driven by gains in companies benefiting from stay-at-home orders as we discuss later today on our LPL Research blog.

Silver lining in consumer confidence data. The Conference Board’s Consumer Confidence Index for April came in at 86.9, one of the biggest monthly drops ever. But there was a silver lining in the report, as the expectations component of the survey actually rose by more than 5 points. This budding optimism is great to see, as we discuss later today on the LPL Research blog.

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.

This Research material was prepared by LPL Financial, LLC.

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