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Recent inflation data has tempered expectations for future Federal Reserve tightening, including a potential peak in the terminal rate near 5.0% in May or June of 2023. While the market has welcomed this news, history suggests the path to a Fed pivot could be volatile for stocks due to elevated inflation and interest rate risk.

The S&P 500 has been stuck below its 200-day moving average (dma) for a statistically long time. History suggests the path to recapturing the 200-dma may require more time with additional downside risk. However, after the index has been contained below the 200-dma for extended periods comparable to today, forward 52-week returns for the S&P 500 have historically been bullish.

Midterm elections are upon us, with Election Day on Tuesday. Republicans are strongly favored to win the House, and the Senate is roughly a tossup. We believe either outcome would be marketfriendly, although the bigger market driver will likely be central banks’ efforts to tame inflation. In this week’s Weekly Market Commentary, we look at why the stock market may respond favorably to the midterm election, whatever the outcome.

Stocks finished higher as Q3 earnings, so far, have come in better-than-expected by market participants. So far, with help from upside surprises in the energy space, S&P 500 earnings are now tracking to a more than 2% year-over-year increase.

If the U.S. economy enters a recession, the causes and potential outcome will be hotly debated. At LPL Research, our starting point is always looking at history. This week’s commentary will remind us of three things we know about historical recessions.

The latest weekly data from the American Association of Individual Investors (AAII) showed the percentage of individual investors who are bullish about short-term market expectations at very depressed levels (20.4%), and continued the trend of an extremely elevated proportion of bearish investors (55.9%).

With so much focus on the equity bear market, inflation, interest rates, the Federal Reserve (Fed) and rising recession risks, it’s perhaps no surprise that the buildup to the U.S. midterm elections has taken more of a backseat than in prior election cycles.

When markets are down, the natural bias is to sell. But looking at history, the more the S&P 500 is down, the better it does in the next year, on average. Like boxing for Eddie Dupris, everything in investing is backwards.

Recessions have been relatively small blips in economic history.

Stock markets around the world have entered bear territory. In the U.S., the S&P 500 Index has plummeted more than 23%, year to date, as of September 26, 2022. Today, many investors are focused on the likelihood of recession, rising rates and more pain ahead.

In a year when soaring inflation, the war in Ukraine and a bear market have commanded headlines, the U.S. midterm elections risked becoming an afterthought. But now the election is coming back into focus. And with good reason. Capital Group political economist Matt Miller believes 2022 could be one of the more consequential midterm elections in U.S. history.

Markets worldwide suffered losses amid a hotter-than-expected August Consumer Price Index (CPI) print along with negative leaning Q3 corporate announcements. Given Tuesday’s inflation report, market participants are expecting the Federal Reserve to increase interest rates by at least 75 basis points (b.p.) at its meeting next week to take its short-term interest rate to 3.25%.

"So will this September be another struggle? The combination of peak hawkishness from the Fed and the frustratingly slow pace at which inflation is cooling could continue to weigh on stocks for another month or more." - Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial

For investors September is often a month to remember but for the wrong reasons. In fact, as shown in the LPL Chart of the Day, September has historically been one of the weakest months of the year for stocks.

Earnings growth of 6-7% doesn’t sound very exciting, but given the challenges corporate America has faced, we consider the nearly-complete second quarter earnings season a resounding success.

Investors cheered the two better-than-expected inflation reports last week, pushing the S&P 500 to 16% above its June 16 low and only 11% below its all-time high. After this rebound, the key question investors are asking is whether this is a bear market rally that will soon fizzle or the start of a new bull market.

The latest weekly data from the American Association of Individual Investors (AAII) showed a continued increase in the percentage of individual investors who are bullish about short-term market expectations (32.2%), and a continued reduction in the number of bears (36.7%). This puts the spread between the bulls and the bears at -4.5%, still slightly bearish overall but at the lowest level of pessimism since the end of March 2022.

Markets rarely give us clear skies, and there are always threats to watch for on the horizon, but the right preparation, context, and support can help us navigate anything that may lie ahead. So far, this year hasn’t seen a full-blown crisis like 2008–2009 or 2020, but the ride has been very bumpy. We may not be flying into a storm, but there’s been plenty of turbulence the first part of 2022.

10 Things You Should Know About Inflation After decades in hibernation, inflation’s back. Here are the basics about this invisible thief.

10 Things You Can Do If You're Feeling Inflation's Pinch We’re facing the worst inflation in decades. Here’s how you can lessen its impact on your wallet.

For many, the rules regarding Social Security benefits are unclear, particularly when it comes to spousal benefits. Making matters more challenging is the fact that the rules aren’t the same for those who are married, widowed, or divorced. These examples can help clarify some of the confusion using four scenarios.  

With the S&P 500 Index in correction territory (down more than 10% from the previous peak) while the market faces a number of big threats, including inflation, a hawkish Federal Reserve, soaring yields, and war in Eastern Europe, investor anxiety levels are understandably elevated.

The AAII US investor sentiment is very negative which has been a contraindication bullish signal.

LPL Research discusses the latest surge in yields and if a recession could be on the horizon.

Midterm years see an average peak to trough correction of 17.1%.

When volatility rears its ugly head, our instinct is to take our money out of the market to safeguard it. However, history shows that rather than giving in to fear, staying invested and buying stocks during volatile times can be beneficial in the long run.

Global stock markets are selling off hard after Russian military forces attacked a broad range of targets across Ukraine last night while Russian President Putin vowed to replace Ukraine’s government. What does it all mean for stocks and the economy? “Russia invading Ukraine has added to an already tense year, with investors selling first and asking questions later,” explained LPL Financial Chief Market Strategist Ryan Detrick.

Lately, we’ve seen two things swirling that some investors think could hurt them down the road. The idea that higher yields and rate hikes are bad is all over the place, but it all might not be so simple. In fact, looking back at history, neither are necessarily true.

Our resurgent economy grew at over a 6% pace in the first half of the year and is on track for 5% growth for the year when 2021 draws to a close. The current economic recovery, which started in May 2020, benefited from widespread vaccine availability and additional fiscal stimulus. While the economy continues to move forward, we’re still feeling the aftershocks of the COVID-19 Delta variant, whether through elevated inflation, supply chain bottlenecks, or an imbalanced labor market.

And just like that, the calendar turned to October and volatility picked up in a big way, with three consecutive 1% moves for the S&P 500 Index to start the month. As we noted in our October preview, this month gets a bad rap for being a bearish month (it isn’t), but it absolutely owns the title as the most volatile month.

Ryan Detrick, chief financial strategist at LPL Financial, joins “Squawk Box” to discuss the economy and risk of inflation for the U.S.

With increased concerns about the Delta variant, high inflation, and recentmisses on economic data, it can be easy to forget that we’re still in the middleof a robust economic recovery and leading indicators continue to support apositive outlook. On Thursday, August 19, the Conference Board released itsJuly 2021 report detailing the latest reading of its Leading Economic Index(LEI), a composite of ten data series that tend to lead changes in economicactivity.

Monday’s big down day was a harsh reminder of how markets actually can produce volatility. It was the worst day of the year for the Dow and only the second drop of 1% or more for the S&P 500 Index in just over two months. As we noted recently in Three Things That Worry Us, there are many reasons to think that after more than a 90% rally (and virtually a double on a total return basis), the S&P 500 could finally be ready for a break.

The U.S. economy powered forward faster than nearly anyone had expected in the first half of 2021. As we were writing our Outlook for 2021 in late 2020, our economic views were significantly more optimistic than consensus forecasts—but in retrospect, not nearly optimistic enough. Our theme was getting back on the road again and powering forward.

Although there was some notable weakness in the middle of May, the S&P 500 Index was able to rally late in the month to finish with a modest gain. Incredibly, this was the eighth year out of the past nine that stocks gained during in May.

More than 2.3 million Americans currently receive Social Security spousal benefits. The average benefit is almost $800 per month, and some spouses receive significantly more. These valuable benefits can make a big difference in funding retirement for a married couple and might result in higher total benefits, even if both spouses have their own work records.

Historically, the middle part of May is when you tend to see the "Sell in May" thing me keep hearing. In other words, the next two weeks could be potentially dicey.

“You can’t time the market” is an old maxim, but you also might say, “You can’t always time retirement.”

Fed Day. The Federal Reserve (Fed) finishes their two-day Federal OpenMarket Committee (FOMC) meeting today with a decision on interest rates and policy statement, followed by a press conference with Chair Jerome Powell.

Many IRA and retirement plan limits are indexed for inflation each year. While some of the limits remain unchanged for 2021, other key numbers have increased.

Well, we can officially say goodbye to 2020. Although there still will be many challenges in 2021, we do see much better times ahead. Just how amazing was it? “2020 will go down in history as the first year to ever be down 30% at one point and still finish in the green,” explained LPL Financial Chief market strategist Ryan Detrick. “We’ve had some wild years for investors, but never one that was quite the roller coaster of 2020.”

“One of the most helpful things that anybody can learn is to give up trying to catch the last eighth—or the first. These two are the most expensive eighths in the world.” –Jesse Livermore

The Chinese New Year (often called the Lunar New Year) will kick off Friday, February 12, and with it will begin the Year of the Ox. Although we would never suggest investing based on the zodiac signs—itis important to note that the Year of the Ox has historically been quite strong for equities. Not to mention we are saying goodbye to the year of the Rat. Good riddance to the Rat, as the last two years of the Rat were 2008 and 2020, not the best years for many reasons!

“In the short term, the market is a popularity contest. In the long term, the market is a weighing machine.” -Warren Buffett The incredible action from some of the most heavily shorted names has investors everywhere wondering what it all means? GameStop (GME)specifically has taken the country's imagination by storm, as the stock started the year under $20 per share and this morning nearly hit $500.

2020 has been a tumultuous year, and as we near its close, we are pleased to present Outlook 2021: Powering Forward, which outlines our views on markets, the economy, and policy into 2021 and beyond.

Election years can be fraught with uncertainty as developments surrounding the candidates, their platforms, and their predicted effects on the economy and markets dominate the news. But should you let this stream of political information influence how you and I manage your investment portfolio? A lengthy history of empirical research suggests not. Elections matter, just not in all the ways you might think to an investor.

History suggests waiting until a new president's policies take shape hinders rather than helps long-term results.

As we approach the upcoming presidential election, how might the potential outcomes impact the economy and markets?

The S&P 500's .SPX record closing high on Tuesday confirmed that the coronavirus-fueled bear market of 2020 was by far the shortest ever.

"LPL Financial Research Chief Market Strategist Ryan Detrick talks about why gold is at all-time highs and we're bullish on gold." -LPLResearch

"LPL Research’s Midyear Outlook 2020 provides our updated views of the pillars for investing—the economy, bonds, and stocks. As the headlines change daily, look to these pillars, or trail markers, and the Midyear Outlook 2020 to help provide perspective on facing these challenges now and preparing to move forward together."

In response to the economic challenges posed by the pandemic, the CARES Act introduced a waiver for required minimum distributions (RMD) for owners of IRAs and retirement accounts for 2020.

Politics and investing have always been spoken about in the same breath. Commentators and candidates alike often frame the performance of the stock market as a sort of “barometer” of a president’s policies.

Although the fight against COVID-19 continues to dominate the headlines and our thoughts are with those affected, this is an election year and as we get closer to November it will begin to garner more attention.

This post will give you information on the Michigan Auto Insurance Reform and how it may affect your health insurance. Your health insurance may vary, so please be sure to check with your agent before making changes to your auto insurance.

While tens of millions of Americans were losing their jobs, the stock market in April produced its best monthly return in over 30 years. What’s behind this apparent disconnect?  

2020 is only five months old, but in many ways it is one of the most historic years we’ve ever seen. “2020 went from moving along nicely, to seeing the worst recession in a generation and the fastest bear market ever,” explained LPL Financial Senior Market Strategist Ryan Detrick...

The incredible rally off the March 23 lows continues for equities, with the S&P 500 Index now up more than 32% in 40 trading days. As impressive as the rally has been, we do have some near-term concerns, as we discussed in Downside Risk Remains...