What Happened?

In short, the recent sell-off was underpinned by three primary factors, including: 1) overbought conditions coming into August — especially in big tech; 2) waning confidence for a soft landing due to last week’s weak Institute of Supply Management (ISM) manufacturing and employment data; and 3) the rapid unwinding of the crowded yen carry trade.   

What Should Investors Do?

To boil down the conclusion of our research into one simple message, don’t panic. Pullbacks and corrections are quite common, even during a strong bull market. Over the last 70+ years, the S&P 500 has experienc

This latest bout of market volatility has been unsettling, especially after such a calm 2023 and 2024 for stocks. However, with the benefit of some historical perspective, volatility of this magnitude is quite common.  

That said, Monday morning's brief spike in the CBOE Volatility Index (VIX) to over 60, which we wrote about in "Navigating the Storm: Insights on Current Market Volatility", was certainly not normal. Now that this measure of implied volatility based on S&P 500 option prices is back to more normal levels in the low 20s after closing at 38.6 on Monday, it’s fair to say this pullback has been

While there has been some rebound today, the sell-off in stock markets from Thursday to Monday’s trading sessions was sharp and accompanied by a significant increase in volatility. We discuss how this current pullback and market volatility compares historically, and what this may infer for forward stock market returns.

After an extended period of a “bad news is good news” market, with participants believing data on a slowing economy would give the Federal Reserve (Fed) clearance to cut interest rates, we appear to have abruptly moved to a “bad news is bad news” environment. Market concerns have coincided in th

Causes of the Market Selloff

• The current pullback markets are experiencing comes as multiple market concerns have coincided over the last few days. The primary driver stems from concerns the Federal Reserve’s (Fed) higher-for-longer policy will drive the U.S. economy into recession (a so-called hard landing) following the weak payroll employment report on Friday, August 2. Soft Institute for Supply Management (ISM) manufacturing data added to the selloff in global risk assets.
• Investor sentiment had become a bit frothy, causing us to suggest stocks had gotten a bit ahead of themselves in LPL’s Midyear Outlook 2024: Still W