Index Performance

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US and International Equities

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The major market indexes finished the week lower. In addition, many international markets followed in lockstep with their US counterparts. Emerging markets (MSCI EM Index) outperformed developed international markets (MSCI EAFE Index).

 

For the second week in a row, energy was a standout performer among its sector peers, while communication services, information technology, and consumer staples were among the laggards this week.

 

Energy Leading the Pack

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Building on its impressive start to the New Year last week, energy cont

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One of the top questions we’ve received recently has been what a blue wave may mean for investments. After the Democrats won the two Senate runoff elections in Georgia, they will now control the White House and both chambers of Congress. Our January 11 Market Policy Projections for 2021 gave some of the immediate and longer-term policy impacts of the Democratic “blue wave,” and here we surf the blue wave with some interesting charts.

 

First off, blue waves have not been bearish for stocks, with the S&P 500 Index higher 6 of the past 7 times and up a respectable 9.1% on average since 1950.

 

&nb

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Heading into 2020, we maintained our preference for growth stocks as we believed that earnings growth would become harder to come by as the economic cycle aged, and their robust earnings growth was greatly appealing. These same growth stocks bucked historical precedent and proved to be well insulated from the economic effects of the stay-at-home environment presented by the outbreak of COVID-19. As the economy began to emerge from lockdown after the horrendous second quarter of 2020, a cyclical trend began to emerge, and we’ve slowly been warming up to value stocks as a result.

 

In particular, we upgraded our view of the fin

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Rising COVID-19 cases and concern about the policy environment put a dent in small business optimism in the month of December, the index’s second straight monthly decline. As shown in the LPL Chart of the Day, the National Federation of Independent Business (NFIB) Small Business Optimism Index, a survey of more than 500 firms, declined in December to 95.9, falling below the long-term average index value since 1973 of 98. Further, 9 of the 10 index components declined, while only one—satisfaction with current inventory—managed to improve.

 

 

The rise in COVID-19 cases in the fourth quarter of 2020 and

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