Summer has turned to fall, and there’s already a little chill in the air. Three-quarters of the year is behind us now, and both stock and bond markets have had a strong year so far, although we expect to see regular — but normal — bouts of volatility as we progress through the fourth quarter. In its first week October has lived up to its reputation as a volatile month, but it’s important to keep in mind that October actually has been the third strongest month on average for the S&P 500 Index for the past 20 years. We’ll be watching several key factors over the rest of the year as the weather continues to cool and end-of-the year activities heat up.

Trade and impeachment have garnered a lot of the headlines recently, but behind the scenes the U.S. economy has remained resilient. Economic data has been increasingly beating expectations. The most recent data points to third-quarter economic growth that’s consistent with the long-term trend of the current expansion, which is now more than a decade long.

Trade headlines have improved in recent weeks. U.S. and China negotiators are scheduled to meet October 10, and the Chinese recently began purchasing U.S. soybeans and pork products again. Reports that the United States would curb U.S. investment in China surfaced and were quickly refuted by the White House. Finally, with the 70th anniversary of the People’s Republic of China behind us, China’s leadership may be in a better position to strike some sort of a trade deal. Even a limited agreement could help shore up business and investor confidence.

While the impeachment process will receive a lot of press attention, we do not expect much impact on the economy or markets. The main risk is that the political discourse may harm investor confidence.

Recession fears have heightened recently following a soft September report on U.S. manufacturing from the Institute for Supply Management. Domestic manufacturers continue to struggle with slowing international growth, tariffs, and a strong U.S. dollar. It’s important to note, however, that manufacturing comprises just 12% of the U.S. economy based on gross domestic product, while consumer spending contributes nearly 70%. U.S. consumer spending remains in good shape with low unemployment and rising wages.

Overall, fundamentals for the U.S. economy remain favorable despite trade uncertainty and increasing political risk in Washington, D.C. U.S. economic data has been exceeding expectations, and consumers continue to benefit from a solid labor market. With further progress on trade possible in the months ahead and more Federal Reserve rate cuts anticipated, this bull market may have room to run.

As always, we encourage you to contact us with any questions, and we hope you enjoy the autumn weather.

_{The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.}

_{All performance referenced is historical and is no guarantee of future results.}

_{All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.}

_{Economic forecasts set forth may not develop as predicted.}

_{Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.}

_{All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.}

_{Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market. Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.}

_{There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.}

_{This research material has been prepared by LPL Financial LLC.}

_{Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL is not an affiliate of and makes no representation with respect to such entity.}

_{If your advisor is located at a bank or credit union, please note that the bank/credit union is not registered as a broker-dealer or investment advisor. Registered representatives of LPL may also be employees of the bank/credit union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, the bank/credit union. Securities and insurance offered through LPL or its affiliates are:}

_{Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed}

_{Not Bank/Credit Union Deposits or Obligations | May Lose Value}

_{Member FINRA/SIPC}