LPL Research released our Midyear Outlook 2020 last week, discussing the path of the eventual economic and market recovery.

What makes this year so incredible is, as of July 21, the S&P 500 Index moved positive for the year. “From down more than 30% for the year at the March lows to green for the year, 2020 has been a roundtrip like few years before it,” explained LPL Chief Market Strategist Ryan Detrick. “In fact, no year has ever been down 30% or more and finished in the green – could 2020 be the first?”

As shown in the LPL Chart of the Day, there have been only a handful of years

While the 10-year Treasury yield has traded in a narrow range since early April, the equivalent real yield, represented by the yield on 10-year Treasury inflation-protected securities (TIPS), has continued to fall and could go lower. Real yields remove the impact of inflation. As shown in the LPL Chart of the Day, while the 10-year Treasury set a new all-time low for yields way back in February, declining 10-year TIPS yields are still above where they were in late 2012.

Falling real yields tell a story. Often it means lower growth expectations, but it can also mean higher inflation expectations, especially with expectations comin

This earnings season may be one to forget. We will see one of the biggest year-over-year quarterly declines in S&P 500 Index profits ever, and we will hear a lot about uncertainty facing corporate America as COVID-19 continues to impact many companies in the United States and globally.  But it may not all be negative.

Estimates May Be Too Low

The unprecedented nature of the COVID-19 lockdowns and widespread withdrawal of corporate guidance has set up an unpredictable earnings season. The magnitude of the decline we are likely to see may make this an earnings season to forget. 

As tough as it is to

Index Performance

S&P 500 Index: 1.3 %

Dow Jones Industrial Average: 2.3 %

Nasdaq Composite: -1.1 %

Equities

US equities delivered modest gains this week, with indexes representing both the midcap and small cap spaces faring best. Both the S&P 400 Midcap and Russell 2000 indexes finished up over 2%. 

With regard to sectors, materials, industrials, and healthcare were up over 5%. Technology and consumer discretionary lagged this week. Large cap value outperformed growth by over 4%.

Talks of another round of stimulus are in the works. While the size and compos