Weekly Market Commentary

September 21, 2026 | LPL Research

For decades, operating margins (earnings before interest and taxes, or EBIT, divided by sales) behaved like a cyclical series. When margins rose well above trend, the forces of competition, input costs, capacity additions, and customer pushback eventually compressed profitability. As Jeremy Grantham, investor and co-founder of asset manager GMO, famously said, “Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism.”

September 14, 2026 | LPL Research

The key lesson from these prior cycles is that rate hikes do not typically derail bull markets. When rate increases coincide with rising recession risks, that’s a different story. Today, recession risks are low by all accounts. Economic growth remains solid, labor markets remain healthy (as reinforced by last week’s jobs report), and inflation, though high, is far below the peaks reached in 2022. Meanwhile, interest rates are already much higher than they were at the start of the last tightening cycle, reducing the shock value for bond portfolios in the case of modest additional increases in market-based rates like the 10-year Treasury.

September 8, 2026 | LPL Research

The concerns underneath the move are legitimate, and dismissing them would be the wrong kind of contrarianism. We want to acknowledge them properly before explaining why we still think the market is functioning as designed. But, like Aesop’s fable about a boy who cried wolf, calling every orderly sell-off a crisis is unhelpful. We don’t think we are there yet, but debt and deficit trajectories are unsustainable on this current path. Something will need to be done. The good news is that we were in a similar situation in the 1990s, and Congress acted. There are some similarities, but differences as well.

August 31, 2026 | LPL Research

Should the recent value rotation be viewed as a regime shift-driven change in market preference, or a simple reversal trade? We think there is a compelling case to be made for the former. In a regime of higher interest rates and stubbornly above-target inflation, the market is increasingly focused on capex intensity, free cash flow conversion, and the cost of capital. Therefore, it makes sense that companies with visible cash generation have broadly regained relative appeal. This does not mean “growth” stocks cannot work. After all, growth is a core component of determining intrinsic value for a diligent stock operator. It simply means investors are less willing to pay premium multiples for earnings streams that require rising amounts of reinvestment to sustain in a “higher for longer” interest rate environment.

August 24, 2026 | LPL Research

Second quarter earnings results — and it seems fair to call them a blowout — have increased our confidence that the earnings outlook can support stocks over the balance of 2026. Not only has the pace of earnings growth surprised us (we expected a percentage increase in the high 20s), but the guidance was good enough for analysts to raise estimates for the second half and 2027.

August 17, 2026 | LPL Research

Global business activity is showing signs of stabilization, but beneath the surface, the world economy remains divided. Growth momentum has improved in several major developed economies, led by a stronger U.S. expansion and a tentative recovery in parts of Europe, while activity across several large emerging markets has cooled from the rapid pace seen earlier this year. Against this backdrop, investors must also contend with lingering vulnerabilities in the global financial system, including Japan's outsized role as one of the largest foreign holders of U.S. Treasury securities, a reminder that shifts in monetary policy or investor behavior abroad can have far-reaching consequences.

August 10, 2026 | LPL Research

The municipal bond market enters the second half of 2026 in a familiar but underappreciated position: absorbing record supply, supported by resilient demand, and operating under a Fed that we expect to remain on hold for the balance of the year. That combination doesn't produce dramatic price returns, and it doesn't need to. 

August 3, 2026 | LPL Research

The S&P 500 settled a whirlwind July moderately lower but maintained healthy year-to-date gains. Just one month into the second half, some of our key market themes cited in LPL's Midyear Outlook 2026 wasted no time making themselves known.

July 27, 2026 | LPL Research

To understand the “average hyperscaler,” we must construct a hypothetical aggregate of the cloud computing infrastructure business segments of the three major hyperscalers previously outlined, with some necessary adjustments due to reporting nuances. These segments are just single business lines within larger businesses, and we recognize that each are at slightly different levels of maturity and their revenue is not wholly generated from “AI-compute.” However, much of the traditional non-AI cloud business infrastructure is deeply integrated into the segment’s AI-compute capability that is being heavily invested in today. Thus, we take a best-effort approach to isolate what matters to create an “average hyperscaler” business.

July 20, 2026 | LPL Research

What do we know about China’s economy? China’s June trade data offered another reminder that the country’s growth story remains uneven beneath the surface. Crude oil imports fell sharply, dropping to their lowest level in nearly a decade as geopolitical disruptions in the Persian Gulf collided with softer domestic demand. The decline suggests refiners remain cautious about inventory accumulation, particularly given uncertainty surrounding shipments through the Strait of Hormuz, a critical artery for roughly half of China’s crude imports. While markets continue searching for signs that Beijing may step in to rebuild strategic stockpiles, the latest figures point to a demand backdrop that remains sluggish despite ongoing policy support measures.

July 13, 2026 | LPL Research

Coming into 2026, we expected inflation to move closer to the Federal Reserve’s (Fed) 2% target, the Fed to cut rates by roughly 75 basis points (bps), and Treasury yields to drift lower. Instead, the first half delivered three stress tests in rapid succession: a leadership change at the Fed, a geopolitical shock that sent oil prices and yields surging, and an AI buildout that is having a measurable impact on the corporate bond market — with the Fed leadership transition among one of our key themes for the balance of the year.

June 29, 2026 | LPL Research

A strong quarter across major indexes. The second quarter is winding down and what a quarter it has been with the S&P 500 up 12.6% quarter to date, while the Nasdaq-100 and Russell 2000 are both up over 20%. Despite some twists and turns, the path of least resistance for stocks broadly remained up and to the right for much of the last three months.

June 22, 2026 | LPL Research

Kevin Warsh, the new chairman of the FOMC, has long been critical of forward guidance, which is the Fed’s practice of explicitly signaling the future path of interest rates (e.g., “rates will stay low for an extended period” or publishing a projected path for policy rates). His concern is that the guidance could give the impression that policymakers might have a high degree of confidence about the future path of the economy and rates. Warsh tends to view this as misleading since macroeconomic conditions, especially inflation shocks, are inherently uncertain, so locking in a path risks being wrong.

June 15, 2026 | LPL Research

The U.S. initial public offering (IPO) market appears to be entering one of its most consequential periods in years. After a long drought following the 2021 issuance boom, a healthier macro backdrop, improved risk appetite, and a long queue of mature private companies have reopened the new-issue window. The potential 2026 class is unusual not only because of the number of companies considering public listings, but because several would be large enough to matter for major equity indexes, passive fund flows, and the broader market narrative around artificial intelligence (AI).

June 8, 2026 | LPL Research

Since the onset of the Iran conflict (through last Friday’s close), the U.S. Treasury curve has experienced a meaningful bear flattening with front end yields rising more than back-end yields. The 10-year Treasury yield has increased by approximately 60 basis points (bps), while the 2-year yield has risen by 77 bps. These moves represent a swift repricing that incorporates several factors: rising inflation expectations tied to energy price volatility, an increase in compensation demanded for uncertainty (known as term premia); and a fundamental reassessment of the path for short-term policy rates.

June 1, 2026 | LPL Research

Before digging into what we think this stock market is worth, it’s important to recognize that valuations have not historically been good timing tools. There is essentially no correlation between valuations and where stocks will go over the subsequent year. However, P/Es have value as a basic valuation tool, especially as it pertains to predicting long-term returns. But it requires context. It’s easy to say that the S&P 500 at a forward P/E of over 21 (based on the consensus S&P 500 earnings per share estimate for the next 12 months) is high based on historical averages. But this approach importantly lacks context around where we are in the economic cycle, the levels and outlooks for inflation, interest rates, earnings, and corporate America’s capital intensity.