As we discussed in earlier this week in Markets Due for a Pause, there were multiple technical reasons to believe that US equities were due for some sort a pullback following a more than 30% rally from the March 23 lows. Technical resistance near the 2935 level for the S&P 500 Index, declining participation, and seasonal headwinds all suggested a near-term downward bias.

On Tuesday and Wednesday, the S&P 500 pulled back more than 3.5%, and closed below its 20-day moving average for the first time since April 3. So where do we go from here?

We would first state that our base case is not for a full retest of th

As stocks rallied 30% off the March 23 lows and earnings expectations were cut dramatically, valuations have become increasingly concerning for many investors (including some high-profile hedge fund managers being quoted in the financial press).

As shown in the LPL Chart of the Day, the forward (next 12 months) price-to-earnings (PE) multiple for the S&P 500 Index recently eclipsed 20, which is overvalued based on historical averages and at the highest level since the tech bubble in the late 1990s.

While stocks look expensive on this metric—one of the reasons why we expect a correction of perh

Gold has done quite well so far in 2020, up more than 12% year to date versus the S&P 500 Index which is down about 10%. We started to warm to the yellow metal late last year and continue to think it can serve as a potential hedge in a well-diversified portfolio for suitable investors.

“From COVID-19, to massive monetary stimulus, to historically lower yields, to potentially negative fed funds rates down the road, there are many reasons to think gold could continue its recent strength,” explained LPL Financial Senior Market Strategist Ryan Detrick.

As shown in the LPL Chart of the Day, gold based for

Like most major segments of the bond market outside Treasuries, mortgage-backed securities (MBS) experienced increased market stress as global COVID-19 containment efforts accelerated. And, like most major segments of the bond market, market stress declined after the Federal Reserve (Fed) stepped in, which included renewed MBS purchases.

Despite the market volatility, MBS were relatively resilient. As shown in the LPL Chart of the Day, while MBS spreads did widen the most since the financial crisis in March, they have returned to close to their long-term average and were not nearly as volatile as corporate spreads.