FOCUS ON FUNDAMENTALS
Burt White Chief Investment Officer, LPL Financial | Jeffrey Buchbinder, CFA Market Strategist, LPL Financial
What are we telling our investors? Focus on fundamentals. It was an up-and-down week for stocks as market participants became increasingly worried that the Trump administration’s agenda was in danger following the latest news surrounding the Russian investigation. On Wednesday (May 17), the S&P 500 Index suffered its biggest one-day drop in nearly a year (-1.8%), while the Nasdaq Composite (-2.6%) and Russell 2000 Index (-2.8%) suffered even bigger losses.
Stocks then recovered nicely Thursday and Friday (May 18–19) to end the week with only a modest loss, the S&P 500 falling 0.4% for the week. As hard as it is to believe, the index is still less than 1% off its all-time closing high [Figure 1]. Some attributed the late-week rebound to the market’s approval of former FBI Director Robert Mueller as special counsel for the Russia investigation. Perhaps markets got more comfortable with where the investigation might lead. More good economic and earnings data probably helped; it’s difficult to know. But whatever the reason for the rebound, this week we focus on the market’s fundamentals which look pretty good.