S&P 500 Index Within a Tiny Fraction of a New All-Time High

S&P 500 Index Within a Tiny Fraction of a New All-Time High

June 09, 2021
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Policy tailwinds may turn into headwinds in 2022, but economic fundamentals likely to dominate

The U.S. stock market was supported by tremendous fiscal stimulus in 2020 and into 2021 and may face some challenges as support slowly moves to the sidelines, but the continued economic recovery will likely be the most important driver for markets into 2022.

  • Stimulus checks to businesses and households should be replaced by a pick-up in employment and economic growth.
  • Direct government spending outside stimulus checks may pick up but will likely have a minimal near-term stimulus effect.
  • Potential tax increases are a larger concern, with markets focused on higher taxes on corporations, which would pull from profit growth.
  • While higher business taxes may contribute to choppier markets, the corporate tax rate is likely to remain among the lowest in the U.S. in the last 70 years even if increased.
  • For more on LPL Research’s policy outlook for the rest of 2021 and into 2022, see today’s Weekly Market Commentary, available at 1p.m. ET.

Daily Insights

U.S. equities open mixed with the S&P 500 Index within a fraction of a new all-time high

  • The Nasdaq Composite is off a fraction as we begin a new trading week.
  • European markets are higher through midday trading as the Euro STOXX 50 is up 0.3%.
  • Asian markets finished their session mixed as Hong Kong (Hang Seng) stocks are almost 0.5% lower.

Technical update

The S&P 500 Index gained 0.6% last week but was still unable to eclipse record highs from May 7. Key levels to watch this week will be 4238 (intraday record high) and the 50-day moving average (currently at 4138). The index closed Friday at 4229.89.

Week ahead

This week the following economic data is slated to be released:

Policy Shifts May Challenge Markets

LPL Research contends that policy tailwinds may turn into headwinds in 2022, but economic fundamentals are likely to dominate. Learn more in this week’s Weekly Market Commentary.

Do You Have Your Mind Right?

On LPL Street View video, LPL Financial Director of Research Marc Zabicki lists three practical steps for mitigating the potential havoc irrational influences can have on investment decisions.

 

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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

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All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index and market data are from FactSet and MarketWatch.

This Research material was prepared by LPL Financial, LLC.

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