After pulling back in the first quarter of 2020, flows into bond mutual funds and exchange-traded funds (ETFs) dominated stocks in the second quarter. As shown in the LPL Chart of the Day, the second quarter is consistent with recent history, as bond flows have topped stock flows in 15 of 18 quarters going back to the start of 2016.

“While there may be some natural explanations for bond flows, there is also concern that bond enthusiasm has moved toward an extreme after a multi-decade bull run,” said LPL Chief Market Strategist Ryan Detrick.

While bonds remain an important part of a diversified portfolio,

Stocks continued their strong run in June, despite rising COVID-19 cases in several western and southern states. Reopening progress, better-than-expected economic data, optimism around vaccine prospects, and the likelihood of more stimulus offered support. We have upgraded our view of growth stocks to positive. 

• Our equities recommendation remains overweight. Although we continue to believe markets may be pricing in an overly optimistic economic recovery scenario and a pullback may be overdue, reopening progress, surprisingly strong recent economic data, and progress on COVID-19 treatments are encouraging, while massi

Here at the midpoint of 2020, we recognize that’s it’s been a very challenging year so far in the United States and around the world. Our team is here to help you navigate this environment.

LPL Research’s Midyear Outlook 2020 reviews where we’ve been in 2020, where we may be heading, and the path that will take us there. We’ll share updated views on the pillars for investing—the economy, stocks, and bonds. Our special elections section explains how stocks and the economy may predict the next president.

Please look for our Midyear Outlook 2020 on July 14, and stay tuned to this blog

Index Performance

S&P 500 Index: 1.8%

Dow Jones Industrial Average: 1.0%

Nasdaq Composite: 4.0%

Equities

US equities delivered positive results this week. In addition, indexes representing both the small and mid-cap space were lower. The Nasdaq, after being down approximately 25% in late- March, is up almost 18% this year and reached an all-time high Thursday.

With regard to sector performers, consumer discretionary and, given the Nasdaq’s strength, technology and communication services were the leaders. Energy, real estate, healthcare, and industrials lagged the markets this week. L