Weekly Market Commentary

Q1 BUYBACKS BOOST STOCKS AMID MARKET RECOVERY

Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial

There have been plenty of catalysts supporting the broader market’s recovery from the correction lows set last month. Oversold conditions fueled by indiscriminate selling left the S&P 500 with washed-out market breadth and a hard reset of its lofty valuation. First quarter earnings season came in much better than feared, and most companies unexpectedly did not pull forward guidance. President Trump's announcement of a 90-day pause on most reciprocal tariffs eased fears of an escalating trade war, while continued progress in trade negotiations further supported the risk-on rally. Steady retail buying and a slow return of institutional demand also supported the rebound. Corporate buybacks, arguably one of the less-discussed catalysts, likely provided an additional boost to the market’s quick recovery. In this week’s Weekly Market Commentary, we explore recent repurchase activity, including who is buying back stock, how much, and how buyback companies have historically performed.

Weekly Market Commentary

TARIFFS AND MARKET VOLATILITY LIKELY TO STICK

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Lawrence Gillum, CFA, Chief Fixed Income Strategist, LPL Financial
Jeffrey Roach, PhD, Chief Economist, LPL Financial
Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial

There has been no shortage of trade policy curveballs thrown at the market since the White House announced shockingly high reciprocal tariffs on April 2. Stocks fell sharply and interest rates spiked on that news, prompting President Trump to pivot to a 90-day reciprocal tariff pause. Since then, trade negotiations have generally progressed, albeit slowly. Then, last week, came another curveball with the U.S. Court of International Trade (CIT) ruling that essentially blocked most of President Trump’s tariffs. Here we discuss what this news means, where the Trump administration goes next, and potential market implications. The legal backdrop has shifted, but the investing landscape really hasn’t changed much.

Weekly Market Commentary

CAN EARNINGS CATCH UP TO THIS STOCK MARKET RALLY?

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial

First quarter reporting season was solid, but results didn’t offer much of a confidence boost in the outlook for the rest of the year. It wasn’t corporate America’s fault — tariff uncertainty makes it very difficult for most companies to offer an outlook that they can have confidence in. Analysts did get enough guidance to take estimates down for the rest of the year to credible levels, which is a positive step in restoring market confidence. And the top technology companies did their part by delivering very strong results while reiterating capital investment guidance that is key to driving growth in S&P 500 profits. Still, these results left us unsure as to whether earnings justify stock prices.

Weekly Market Commentary

MARKET UPDATE: TARIFF PAUSE BOOSTS SENTIMENT, FED STEADY

Jeffrey Roach, PhD, Chief Economist, LPL Financial

Investor sentiment dramatically changed after Treasury Secretary Scott Bessent and other members of the Trump administration announced a temporary pause on tariffs with China. Was that sentiment shift warranted and did anything materially change? Estimates of the effective tariff rate continue to vary and have wide confidence intervals. Volatility will likely remain as the Trump administration is interested in managing perceptions with both midterms and markets in mind. This might explain the high degree of strategic variations in trade policy. Amid the variance, what hasn’t changed is the exceptional structure of the U.S. The two main reasons we believe U.S. exceptionalism will remain — probably for a very long time — are the depth and breadth of U.S. capital markets, and the reserve currency status of the U.S. dollar (USD).

Weekly Market Commentary

BULLS ARE ON TRIAL

Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial

A busy week of earnings, trade negotiations, and monetary policy meetings left the S&P 500 down around 0.5%. Buyer fatigue appeared to be setting in at this stage of the recovery as risk appetite from positive trade headlines faded by Friday. The broader market also faced major overhead resistance and profit-taking pressure from retail investors, who have been the backbone of the rally over the last month. Earnings continued to come in better-than-feared, but “tariff uncertainty” continued to get flagged on most conference calls. The Federal Reserve (Fed) kept rates unchanged and stuck to its patient approach with monetary policy, despite notable downgrades to economic growth estimates and rising recession probabilities since their last meeting.

Bottom line, we remain neutral on equities tactically as the risk-reward trade-off does not appear very attractive right now, and we cannot dismiss the chances of a reversal lower in the coming weeks.

Weekly Market Commentary

FINDING VALUE AMONG THE MUNI MARKET MALAISE

Lawrence Gillum, CFA, Chief Fixed Income Strategist, LPL Financial

The municipal bond market faced significant volatility in April, driven by spillovers from a turbulent Treasury market. Treasury yields were pressured higher by rising inflation expectations; the Federal Reserve’s cautious policy stance, reduced foreign demand; hedge fund deleveraging, portfolio shifts toward cash, and structural illiquidity. These dynamics reverberated across fixed income markets, with municipals experiencing pronounced dislocations due to their fragmented market structure and liquidity constraints. High-grade (HG) municipal yields fluctuated sharply, with AAA benchmark yields traversing an 85-basis point (bps) range in long-end tenors. By month-end, yields ultimately rose by double-digit basis points across the muni curve. But with the dust mostly settled, in our view, value has returned to the muni market and not just for traditional muni buyers. Starting yields, which represent the best expectation of future returns, are above longer-term averages and are equally attractive relative to most taxable alternatives.

Weekly Market Commentary

SOFTER TONE ON CHINA IS ENCOURAGING, BUT SOME CAUTION STILL ADVISED

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial

The softer tone toward China from the White House, President Trump’s pledge not to fire Federal Reserve (Fed) Chair Jerome (Jay) Powell, and renewed optimism about Fed rate cuts all helped drive a strong market rebound last week. The latest advance, while encouraging, raises the bar for additional near-term gains. While LPL Research still has confidence that these trade issues will be resolved and suggests long-term investors stay the course, we would urge patience for those trying to be nimble and tactical. No trade deals, or even frameworks for deals, have been announced yet, corporate America has little visibility, and stocks are expensive for an inflationary environment. Our recently adjusted year-end fair value S&P 500 target of 5,650–5,800 only allows for 5% upside above Friday’s close. We stay neutral on equities tactically for now.

Weekly Market Commentary

REVISING OUR S&P 500 TARGET AMID A STORM OF UNCERTAINTY

Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial
Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial

Clouds of uncertainty continued to hang over U.S. equity markets last week. The S&P 500 slid 1.5% as investors sought refuge in safe-haven assets. Treasury yields declined significantly across the curve, including 0.15–0.20% drops in 2- and 10-year notes, while gold rallied 6.6% and touched record highs intraweek. Big tech and cyclical sectors underperformed. Tariff uncertainty captured most of the blame for the risk-off rotation, but earnings have now “entered the chat.” Several companies pulled forward guidance due to a lack of clarity on trade and/or flagged developing downside risk to growth. Tech giant NVIDIA (NVDA) made headlines after warning of a $5.5 billion revenue hit after the White House restricted the company from exporting its H20 chip to China. The vast unknowns on trade policy have further muddied the outlook on inflation, interest rates, and monetary policy. Based on this backdrop, LPL Research maintains its tactical neutral (not negative) stance on equities and is introducing a revised S&P 500 price target.

Weekly Market Commentary

DECENT CHANCE STOCK MARKET BOTTOM IS IN BUT FAR FROM CERTAIN

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial

Last week we were able to check several of the boxes on our stock market bottoming process checklist. Panic-level fear in investor surveys? Check. Volatility and volume spikes consistent with prior major market lows and capitulation? Check. Washed out levels of breadth? Check. Indiscriminate selling pressure followed by a massive up day when nearly every stock was higher? Check. Better tariff headlines? Yes, but…half check. The 90-day pause on the higher tariff rates helps, as do technology exemptions announced over the weekend, but massive tariff rates on China (now 145%? It’s hard to keep track) and the fact that we could be back in the same place in early July still with higher tariff rates is uncomfortable. And during big market drawdowns, retests of the initial lows are common. So, get your buy orders ready, but be open to the idea of more near-term downside.

Weekly Market Commentary

TARIFF TURMOIL: WHERE DO WE GO FROM HERE?

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Kristian Kerr, Head of Macro Strategy, LPL Financial
Lawrence Gillum, CFA, Chief Fixed Income Strategist, LPL Financial
Jeffrey Roach, PhD, Chief Economist, LPL Financial
Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial

Markets got quite a surprise from the Trump administration last week in the form of tariffs above even the most aggressive forecasts, increasing the risks to economic growth and corporate profits. China quickly retaliated, Europe may follow with tariffs of their own, and some countries may boycott American goods. Some of these tariffs will be passed along to already inflation-weary consumers in the form of higher prices, which will drag down consumer spending while also putting anticipated Federal Reserve (Fed) rate cuts into question. However, there are some possible silver linings once the dust settles. We’re past peak uncertainty and maybe peak pessimism as well. Tariff rates should go down from here as negotiations begin. Interest rates should head lower as the deficit narrows, bringing borrowing costs down. Oil prices are down sharply. And tax cut extensions will be larger and easier to pass. Long-term investors may want to consider doing a little rebalancing into stocks this week after recent bond market gains. More active traders may want to wait for better headlines before stepping in.

Weekly Market Commentary

TARRIF UNCERTAINTY FACING STOCKS TO START CLEARING SOON

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Jeffrey Roach, PhD, Chief Economist, LPL Financial
Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial

Wednesday is the big day when the Trump administration will provide more clarity on their tariff plans. The latest news has been a mix of encouraging talk about narrow reciprocal tariffs and deep and biting auto (and auto parts) tariffs. It’s tough to lay out a tariff playbook for investors right now, so our advice is to wait and see. Markets and corporate America will need time to digest the information and figure out their next move. As potential dip buyers, we’re not in a big hurry.

Weekly Market Commentary

POWELL WALKED A TIGHTROPE

Jeffrey Roach, PhD, Chief Economist, LPL Financial
John Lohse, CFA, AVP Research, LPL Financial

Trade uncertainty and nagging inflation made Federal Reserve (Fed) Chair Jerome Powell walk a tightrope at the latest press conference. The Chairman of the Fed’s monetary policy-setting committee stressed the uncertainty about economic forecasting, tariff impacts, and the growth outlook.

As investors search for clarity under the new administration, they should look for opportunities despite the trials. The tailwinds of deregulation and tax relief could partially offset decreases in immigration and retaliatory tariffs. The U.S. — currently ranked 18th in international tax competitiveness — has an opportunity to improve its standing and thereby spur economic activity.

Weekly Market Commentary

MARKET CORRECTION PERSPECTIVE

Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial
Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial

U.S. equity markets officially entered correction territory last week for the first time in 344 trading days. Tariff uncertainty feeding into economic growth concerns has been the primary catalyst behind the risk-off rotation. The 10% drop — the technical qualifier for a correction — over the last few weeks has been swift and painful, especially given that the selling pressure started from a fresh record high on February 19. However, although the economy has slowed this year as we expected, it has not stopped, and corporate America continues to deliver double-digit earnings growth. The solid fundamental footing supports our thesis that the economy is not entering a recession or a bear market. Historically tight credit spreads further support this view. Our message to investors right now is don’t panic and stay focused on the long term. And remember, volatility also brings opportunity, or as legendary investor Warren Buffet once said, “Bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.”

Weekly Market Commentary

NAVIGATING STRATEGIC AND TACTICAL INVESTMENT HORIZONS: THE DIFFERENCES

George Smith, CFA, CAIA, CIPM, Portfolio Strategist
Craig Brown, Head of Quantitative Strategy

Heightened volatility and uncertainty in both financial markets and the broader economy present challenges and opportunities for investors. Understanding the fundamental differences between the strategic and tactical investment horizons through which an investor can face these challenges and approach these opportunities is essential for navigating these complex environments. Like the more predictable rhythm of ocean tides, strategic investing focuses on longer-term expectations, while a tactical approach responds to short-term market conditions, akin to unpredictable surges and waves on the seas. The annual release of our updated strategic asset allocation provides an opportunity to explore the distinct nature of these investment horizons and examine when and why our strategic and tactical perspectives may diverge, despite sharing the same ultimate objective — delivering a performance in excess of the benchmark over the target time horizon.

Weekly Market Commentary

EARNINGS SEASON RECAP: STRONG GROWTH, BIG UPSIDE, NOW WHAT?

Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial

Fourth quarter earnings season is nearly complete, and it has been a good one. S&P 500 companies grew profits more than 18% year over year, according to FactSet data, with mega cap technology and financial companies doing most of the heavy lifting (about seven points of growth came from each). The Magnificent Seven grew earnings by an average of 37% and financials earnings jumped 50%. But the road ahead gets tougher. With new tariffs in place and more likely on the way, on top of mounting evidence that the U.S. economy is slowing, achieving double-digit earnings growth in 2025, as many expect, will be a tall task.

Weekly Market Commentary

REFINANCING ZIRP

Lawrence Gillum, CFA, Chief Fixed Income Strategist, LPL Financial

The U.S. Treasury market is entering a significant transition period in 2025, facing both structural adjustments and all-too-familiar policy discussions. As the Federal Reserve's (Fed) shift from a zero interest-rate policy (ZIRP) coincides with a substantial $7.5 trillion refinancing cycle, markets are also preparing for another round of debt ceiling negotiations. For investors, this environment presents compelling opportunities in Treasury securities: Yields above 4% across much of the Treasury curve offer attractive risk-free returns (although market volatility is expected to remain elevated), with potential for capital appreciation if yields fall. However, careful security selection is warranted — investors might consider avoiding Treasury Bills (T-bills) maturing around potential debt ceiling deadlines while taking advantage of higher yields in longer-dated securities that extend beyond these near-term political discussions (we think the sweet spot is in the 1–5-year parts of the Treasury curve). While each of these challenges is manageable, their combination requires thoughtful navigation from policymakers and careful consideration from market participants.

Weekly Market Commentary

TARRIFS IGNITE A METALS MELT-UP

Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial

Stocks continued to climb the wall of worry last week and shrugged off tariff headlines, inflation volatility, and signs of a slowdown in retail spending. President Trump reinstated a full 25% tariff on all steel imports — effectively closing any loopholes and exemptions — and increased the tariffs on aluminum imports to 25%. Most metals rallied on the news as fear over forthcoming tariffs on a broader range of metals sparked a surge in demand. The White House also announced plans to impose reciprocal tariffs on a country-by-country basis to “correct longstanding imbalances in international trade and ensure fairness across the board.” Stocks discounted the news after it was revealed the tariffs would not be implemented until April, leaving some time for negotiations. A drop in the dollar and interest rates provided another tailwind for risk appetite last week.

Weekly Market Commentary

KEY PILLARS OF THE BULL AND BEAR CASES IN 2025

Jeffrey Buchbinder, Chief Equity Strategist, LPL Financial
Lawrence Gillum, Chief Fixed Income Strategist, LPL Financial
Adam Turnquist, Chief Technical Strategist, LPL Financial
Brian Booe, Associate Analyst, LPL Financial

Use of the terms “bull” and “bear” in financial markets can be traced back to London’s financial district in the late 19th century, used as an analogy for how each animal attacks; the bull thrusts its horns upwards, and a bear swipes its paws downwards. Others believe the terms started in the 16th century when bearskin salesmen would sell skins they had yet to receive from trappers, hoping the price from trappers would drop. We’ll leave that debate to you. On Wall Street today, firms consider a base case, or what they believe will likely occur, and bull and bear cases of factors that could sway markets in either direction. As our base case, we expect moderate gains for stocks, rangebound Treasury yields, and slight cooling in the economy. But as the recent spike in volatility and subsequent rebound has illustrated, nothing in capital markets is a sure thing.

Weekly Market Commentary

U.S. EXCEPTIONALISM: IS IT STILL INTACT?

Dr. Jeffrey Roach, Chief Economist, LPL Financial
Joshua Cline, Associate Analyst, LPL Financial
Brian Booe, Associate Analyst, LPL Financial

With China’s DeepSeek pressuring investors to take a closer look at the current environment of artificial intelligence (AI) development within the U.S., some are taking a moment to question the accuracy of a much larger idea — American Exceptionalism. Ever since the end of the world wars, international leaders have acknowledged the “exorbitant privilege” the U.S. has with its de facto global reserve currency. With great privilege comes great responsibility. In this piece, we discuss the factors that define U.S. exceptionalism with its implications.

Weekly Market Commentary

IS THE BOND MARKET WORRIED ABOUT INFLATION?

Lawrence Gillum, CFA, Chief Fixed Income Strategist, LPL Financial

The Federal Reserve (Fed) cut interest rates last September and, to date, the central bank has lowered rates by 1%. But over the same period, long-term Treasury yields are higher by 1% (per the 10-year Treasury yield). Does that mean bond investors are worried about inflationary pressures reigniting, particularly with tariffs and a pro-growth policy agenda under the new Trump presidency? Not yet at least. The bond market is expecting inflationary pressures to be higher than the low inflation regime experienced pre-COVID-19, but inflation expectations are not necessarily unanchored, which is good news for the Fed. And for those investors worried that inflationary pressures could reignite, Treasury Inflation-Protected Securities (TIPS) could be a good addition to portfolios to hedge potential inflation shocks.