In LPL Research Outlook 2021: Powering Forward, we noted that large interest rate declines historically have been followed by reversals. With the 10-year Treasury yield continuing to climb, now’s a good time for an update. As shown in the LPL Chart of the Day, since 1990, the 10-year Treasury yield had declined at least 1.5% in a year seven times, based on quarterly data. The most recent decline was as of the end of March 2020. Will history hold true this time around?­­­­

“The previous six times the 10-year Treasury yield was down at least 1.5% in a year as of the end of the quarter, it was higher a ye

Index Performance

US and International Equities

The major market indexes finished the week higher. The tech-heavy NASDAQ had a solid week returning over 4%. In addition, many international markets followed in lockstep with their US counterparts. Emerging markets stocks (MSCI EM Index) handily outperformed developed international markets (MSCI EAFE Index) by almost 2 percentage points.

Emerging Markets Emerge

Even with the emerging market’s (EM) strong performance this week, LPL Research believes these investments have more upside potential.

• The forward Price Earning

Today Joe Biden becomes the 46th President of the United States. We’ve already looked forward at what his presidency, coupled with a blue wave in Congress, could mean for policy in Market Policy Projections for 2021, so today we take a look back at how stocks performed under President Donald Trump.

As shown in the LPL Chart of the Day, the Dow Jones Industrial Average (Dow) gained approximately 56% during Trump’s four years in office, which comes out to an annualized return of an impressive 11.8%. “President Trump’s annualized Dow return of 11.8% was the best for any Republican president since President Ca

This earnings season likely will be the last of the earnings recession. After year-over-year declines in the first three quarters of 2020, the fourth quarter likely will make it four in a row. Looking ahead, earnings are likely to grow solidly in the first quarter 2021 and throughout the year, which we think will enable stocks to grow into their lofty valuations.

Expect Modest Earnings Decline

We expect solid upside to S&P 500 corporate earnings relative to current estimates. However, expecting a year-over-year increase may be too much to ask. Consensus is calling for a roughly 8.5% year-over-year decline in earnings pe