Corporate America delivered quite an encore to a surprisingly good second quarter earnings season with more of the same in the third quarter, despite a higher bar. S&P 500 Index companies didn’t quite match the biggest upside surprise ever—but they came close. We’re optimistic about the earnings recovery in 2021 and beyond, and outline five key takeaways for investors.

An Encore Performance

Earnings blew away expectations during the second quarter as the unprecedented COVID-19 lockdowns early in the quarter, followed by the uncertainty and unevenness of the reopening and limited guidance from corporate

It took more than two years, but small caps finally broke out to new highs, as the Russell 2000 Index on Friday closed at its first new high since August 31, 2018.

This capped off one of the longest stretches ever without a new high.

“We’ve seen large cap strength for years, but it is great to finally see the little guys join the party,” explained LPL Financial Chief Market Strategist Ryan Detrick. “Don’t forget there are many more small cap than large cap names, so this is yet another sign that overall market breadth and participation is improving.”

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Stocks just had their best week since April, with the S&P 500 Index incredibly a chip shot away from new all-time highs. Joe Biden will be the next President of the United States, but markets are confident Republicans will maintain the Senate, and this means gridlock in Washington. Remember, gridlock is good, as it pulls policy towards compromise and avoids extremes. Also, any legislative changes to taxes, regulation, and capital gains will have meaningful input from both parties.

As shown in the LPL Chart of the Day, a split Congress tends to mean stronger stock returns, almost ignoring whether a Democrat or Republican is in

2020 has been a year of records, both record losses and record gains. After a brutal spring, markets and the economy have mostly rebounded in the summer and fall. We take a closer look at October 26’s record gross domestic product (GDP) report, which may have implications for the upcoming presidential election. 

Record Growth in The Third Quarter

The outbreak of COVID-19 and the subsequent lockdowns triggered the largest quarter-over-quarter decline in GDP since WWII, so perhaps it comes as no surprise that the following quarter tallied the sharpest rebound in that same time period. GDP grew 33.1% annualized in th