The Market Week Ahead: Nov. 5 – Nov. 9

 

Nov. 5  – Tuesday’s mid-term election is likely to be the biggest news this week, regardless of the outcome. The Federal Reserve meeting, even with no change in rates expected is likely to be second, as traders will be pouring over the statement for clues about the December meeting, where expectations are for another rate hike.

How the market reacts to the election will be interesting. With most polls and pundits pointing toward Democrats taking control of the House and the GOP keep the Senate, we’d expect a smaller market reaction to that outcome than one of the other possibilities. There are probably better outcomes for the country and the economy than the gridlock likely to come from a split Congress, but it does create some certainty around policy, which is generally something the business community appreciates.

The reaction to the Federal Reserve meeting is probably harder to determine. A signal toward another hike in December would be both what the market is expecting, and also what it doesn’t want. That said, economic data has been strong. People continue to re-join the workforce and find jobs and wages are rising. Another rate hike would mean the Fed thinks the economy is doing well. This is one of those cases where what is good for the economy isn’t necessarily the best thing for corporate profits, which means it may be bad for stocks.

The thing we feel certain about at this point, based on the calendar, and the technical situation we discussed on Friday,  is that we’re likely to see some volatility as we head toward the second half of this week.

Economic Events this Week

Not listed here, but Tuesday’s mid-term election is the biggest news of the week. The case that seems most likely, and thus the one the market probably expects, is that the Democrats will take control of the House while the Republicans will maintain control of the Senate. Changes from that could spark some volatility. The isn’t expected to change rates at this meeting, but it will be interesting to see how the statement changes as the general consensus is still that rates will go up again at the December meeting.

  • Monday
    • 10:00 a.m. – ISM Non-Manufacturing Index
  •  Wednesday
    • 10:30 a.m. – Crude Inventories
  •  Thursday
    • 2:00 p.m. – FOMC Rate Decision
  • Friday
    • 8:30 a.m. – PPI
    • 8:30 a.m. – Core PPI

Earnings Reports this Week

We’re on the downside of earnings season, but there’s still quite a few big names here. With elections and a Fed decision this week, we don’t expect any of these reports to have an outsized effect on the broader market. 

Monday:

  • Before the bell: SYY, PCG, RACE, L, CNA
  • After the bell: BKNG, OXY, MAR, NTR, SBAC

Tuesday:

  • Before the bell: LLY, CVS, BDX, EMR, REGN
  • After the bell: PXD, DXC, DVN, PAA, MTCH

Wednesday:

  • Before the bell: FOXA, SO, HUM, SRE, ROK
  • After the bell: QCOM, PRU, KDP, MFC, SQ

Thursday: 

  • Before the bell: AZN, JCI, WP, TU, DISCA
  • After the bell: DIS, ATVI, CTL, SWKS, LBRDK

Friday:

  • Before the bell: STWD, ATHN, ESNT, TRCO, ADNT

Sector Analysis 

The market hasn’t been great lately, so the longer lists are all on the downside this week.

Strong Sectors past Month

There isn’t much up 5% or more in the last 20 trading days:

  • Volatility

Weak sectors past month

There’s a lot of red out there if you look at the last 20 days, but the list is shorter than last week. These sectors are down 5% or more in the last 20 trading days:

  • Oil Services
  • Oil & Gas Exploration
  • Energy
  • Industrials
  • Commodities
  • Regional Banks
  • Robotoics
  • MLPs
  • Biotech
  • Banks
  • Technology
  • Semiconductors
  • Internet
  • Materials
  • Nasdaq 100
  • Metals & Mining
  • Small caps
  • Homebuilders

Strong sectors past five trading days

  • Solar
  • Homebuilders
  • Robotics
  • Steel
  • Semiconductors
  • Materials
  • Banks
  • Airlines
  • Broker-dealers
  • Financials
  • Regional Banks
  • Metals & Mining
  • Retail
  • Consumer Discretionary
  • Insurance
  • Cyber Security
  • Consumer Staples
  • Biotech
  • Medical Devices
  • Oil & Gas Exploration
  • Industrials
  • Internet
  • Dow Jones Industrial Average
  • S&P 500
  • Health Care

Weak sectors past five trading days

  • Volatility
  • Commodities

Bobby Raines

Bobby Raines

Bobby Raines is the Managing Editor of the Market Intelligence Center. He has degrees in Mass Communications and History from Emory & Henry College. Bobby worked at a mid-sized daily newspaper before making a switch to covering the financial industry full time in the years leading up to the financial crisis. He has been a member of the Fresh Brewed Media team since 2011 and has served as a writer and analyst. You can write to him at braines@marketintelligencecenter.com or follow him on Twitter: @BRatMICenter.

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