POTENTIAL PATHS FOR STOCKS IN THE SECOND HALF
John Lynch Chief Investment Strategist, LPL Financial | Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial
Stocks staged perhaps the strongest rally in history—a more than 44% gain for the S&P 500 Index from March 23 through June 8—before pulling back about 6% late last week. With so much economic healing ahead of us and a still-uncertain path for COVID-19, the key question for investors is whether stocks are pricing in an overly optimistic scenario for the recovery in economic activity and corporate profits.
MARKETS REFLECT A LOT OF OPTIMISM
Our expectations for a gradual economic recovery in the second half, discussed here last week, appear to be in conflict with the stock market’s rapid ascent over the past 12 weeks. On one hand, gains appear appropriate based on the likelihood that the recession...