Aug. 6 – This week could be a decisive one for the stock market. the S&P 500 has been hovering right around the 2,800 level since the second week of July, unable to generate any sustained upward momentum, despite a generally positive earnings season.
We say “generally positive” because big misses from momentum names like Netflix, Facebook and Twitter have overshadowed the fact that the vast majority of companies reporting so far have topped expectations, and expect to continue growing. There’s little reason to expect the number or size of earnings beats to change at this point in the season, so the news on the earnings front seems likely to remain good.
Keeping markets in check has been the rhetoric on trade. While President Trump keeps saying that he would like a world with no tariffs, so far, the tariffs imposed by his administration have lead only to retaliatory measures from other countries, and no actual trade agreements. The effects, so far, have only shown up around the margins, but stocks, like Boeing and Caterpillar, that rely heavily on international trade have under performed since the Spring.
S&P 500 component Newell Brands (NWL) said this morning that the impact of tariffs could be around $100 million, when you include both the new import duties in the U.S., and retaliatory measures imposed by other countries. Newell has some other issues though, so it is hard to know exactly how much of it’s new lower guidance is related to tariffs, or if management just decided to blame the company’s under performance on trade.
With the market’s broadest index, the S&P 500 sitting on top of the key 2,800 level that has served as both support and resistance at different times this year, things could be positioned for a breakout to the upside if we can keep getting good earnings news. With the exception of a minor panic in techs that followed earnings from Netflix, Facebook and Twitter, the last several attempted breakouts have been quashed by negative headlines on trade. If those can be avoided, we could see a rally develop.
Economic Events this Week
The producer and consumer price indices will provide a look at inflation, while also giving us a picture of how tariffs are effecting businesses and consumers..
- 10:30 a.m. – Crude Inventories
- 08:30 a.m. – Producer Price Index
- 08:30 a.m. – Unemployment Claims
- 10:00 a.m. – Wholesale Inventories
- 8:30 a.m. – Consumer Price Index
Earnings Reports this Week
We’re on the back side of earnings season, but there are still a number of big names reporting this week.
- Before the bell: EMR, PPL, TDG, DISCA, BR, EXPD, XRAY
- After the bell: DIS, PXD, DXC, CLR, PAA, HST, SNAP
- Before the bell: CVS, SO, TRI, MGA, MYL, WB, LSXMA
- After the bell: BKNG, FOXA, OXY, MFC, EQIX, NTES, MNST
- Before the bell: CCE, LNG, WP, VIAB, TRGP
- After the bell: MCHP, INVH, DBX, NWSA, ICUI
- Before the bell: ERF, AIT, RITH, CYD, AP
Our lists are relatively short this week as the market has been relatively quiet for several weeks
Strong Sectors past Month
These sectors are up 5% or more in the last 20 trading days:
These sectors are down 5% or more in the last five trading days:
- Gold Miners
Strong sectors past five trading days
These sectors are up 3% or more in the last five trading days>
- Real Estate
Weak sectors past five trading days
These sectors are down 3% or more in the last five trading days.
- Metals & Mining