“Sell in May and go away” is probably the most widely cited stock market cliché in history. This week, we tackle this commonly cited seasonal pattern and why it might not play out this year, similar to recent years.
Earnings will be key to the path for stocks the rest of the year given that we believe valuation expansion will be tough to come by with higher interest rates and stubbornly high inflation.
The team at LPL Research reduced U.S. and global GDP forecasts due to Russian commodity disruptions, elevated inflation dynamics, and higher borrowing costs. Still, we expect the U.S. economy to grow 2.7-3.2% in 2022, supported by business investment and consumer services spending in the latter half of this year.
The Federal Reserve meets this week and in all likelihood will raise short-term interest rates for the first time since emergency levels of monetary accommodation were provided to markets after the COVID-19 shutdowns.
We currently expect the U.S. economy to grow 3.7% in 2022. That is down from the previous 4-4.5% range we predicted but still above trend.
With inflationary pressures running higher than most central bankers are comfortable with, calls for interest rate hikes have become louder.
In our special Winter Olympics edition of the Weekly Market Commentary, we hand out medals to the U.S., developed international, and emerging markets. Who do we think will get the gold this year?
After a tough start for stocks in 2022, investors are looking for reasons to expect a rebound. Here we cite some reasons we don’t expect this selloff to go a lot further.
The Fed has engineered a massive hawkish pivot, contributing to an increase in volatility recently. But a look back at history provides some reassurance, as stocks have historically performed well leading up to and after the first rate hike of a cycle.
Corporate America has been on quite a run. Coming into 2021, S&P 500 Index companies were expected to generate less than $170 in earnings per share. As 2022 begins, it looks like that number may end up higher than our latest estimate of $205, one of the biggest earnings upside surprises ever and a big reason why stocks did so well last year.
