After more than seven months, the S&P 500 Index closed at new record high last week, powered by
strength in healthcare and financials stocks, sectors that have significantly lagged the broader market in
The new record highs came amid a relatively light week of economic releases and geopolitical headlines,
though it was one of the busiest weeks of the S&P 500’s quarterly earnings season. “The S&P 500’s new
high follows a more than seven-month drought,” said LPL Chief Investment Strategist John Lynch. “We
think there is a compelling fundamental case for equities at these levels, but a modest pullback may be
overdue after such a strong rally.” Economic data consisted of several housing market reports that
painted somewhat of a mixed picture, as well as the initial read of first quarter gross domestic product
(GDP), which registered its best first quarter growth—at 3.2%—since 2015. Treasury yields fell after the
GDP report, however, as the data showed growth in consumer demand and prices decelerated from the
Foreign stocks were mixed on the week with the STOXX Europe 600 finishing little changed, while
China’s Shanghai Composite (-5.0%) significantly trailed Japan’s Nikkei 225 (+0.8%), which paced major
foreign indexes. The disparity centered on monetary policy, with Chinese reports suggesting
government officials have no intention of providing further support, while policymakers in Japan
reassured investors that ultra-low rates will be maintained for the foreseeable future.
Corporate earnings continue to roll in this week, with heavy hitters such as Google, Apple, and
McDonalds slated to report. The U.S. also has a full economic docket, headlined by nonfarm payrolls and
the Federal Reserve's next policy meeting. Abroad, first quarter GDP figures are due out for the
composite Eurozone, while April manufacturing PMI for China and Japan will garner attention. Track
these and other important events on our Weekly Global Economic & Policy Calendar.
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.
Investing in foreign and emerging markets securities involves special additional risks. These risk include,
but are not limited to, currency risk, geopolitical risk, and risk associated with varying accounting
standards. Investing in emerging markets may accentuate these risks.
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.
Because of their narrow focus, sector investing will be subject to greater volatility than investing more
broadly across many sectors and companies.
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
The STOXX Europe 600 Index is derived from the STOXX Europe Total Market Index (TMI) and is a subset
of the STOXX Global 1800 Index. With a fixed number of 600 components, the STOXX Europe 600 Index
represents large, mid and small capitalization companies across 18 countries of the European region:
Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
The Shanghai Stock Exchange Composite Index is a capitalization-weighted index. The index tracks the
daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange. The index
was developed on December 19, 1990 with a base value of 100. Index trade volume on Q is scaled down
by a factor of 1000.
The Nikkei 225 Stock Average is a price-weighted index comprised of the top 225 blue-chip companies
on the Tokyo Stock Exchange.
The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure
performance of the broad domestic economy through changes in the aggregate market value of 500
stocks representing all major industries.
This research material has been prepared by LPL Financial LLC.
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