Weekly Insights
U.S. equities point toward a slightly higher open
- Market participants consider the effects of Wednesday’s Consumer Price Index (CPI) report on corporate revenues and earnings.
- The Nasdaq Composite is approximately 0.7% higher as market participants seek to take advantage of discounted growth names.
- European equities are lower as the Euro Stoxx 50 is off by 3% during midday trading.
- Most Asian markets finished in the red with Japan’s Nikkei off by almost 2.5%.
Jobless claims beat expectations
- S. claims for unemployment insurance fell to 473k, beating estimates of 490k (source: U.S. Department of Labor).
- The report represents a pandemic low, though claims from the previous report were revised slightly higher.
Still favor U.S. but the international equity outlook has continued to improve
- The tremendous rally in U.S. stocks since March of 2020—this week notwithstanding—has prompted us and others to start looking for opportunities that aren’t pricing in so much optimism.
- We continue to expect the U.S. dollar to weaken, which could boost non-U.S. stock returns.
- The sector mix of the developed international equity benchmark (MSCI EAFE Index) is heavier in cyclical value sectors than the S&P 500 Index with a much smaller technology
- Another reason to take a closer look at international is the recent resurgence of value stocks, as we discuss in today’s LPL Research blog.
Technical update
Wednesday marked the worst day for the S&P 500 since February 25. The selling was broad based, with decliners on the New York Stock Exchange (NYSE) outnumbering advancers by more than 8:1, the worst reading since late October 2020. With support at 4118 broken Wednesday, the next levels of support are the 50-day moving average at 4049 followed by 3980.
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