Market Update: Monday, April 11, 2016


  • Calm end to turbulent week as stocks finish modestly higher. Boosted by a nearly 7% rise in the price of WTI crude oil, 8 of the 10 sectors were positive on Friday, including energy, which posted a 2% gain; consumer discretionary was the laggard amid disappointing sales data from several retailers. The 10-year Treasury yield bounced back slightly to 1.72%, but still ended the week lower by 0.06%. Finally, COMEX gold closed 0.5% higher and WTI crude finished the week at $39.75/barrel. Final tallies: Dow +35.00 to 17576.96, Nasdaq +2.32 to 4850.69, S&P 500 +5.69 (+0.28%) to 2047.68.
  • U.S. markets turn positive. Equities moved from red to green this morning, mimicking a reversal in European indexes. The main driver was a meeting between Italy’s Treasury, central bank, and financial institutions that raised bailout hopes for Italy’s beleaguered financial system. Asian indexes also closed on a positive note as the Shanghai Composite finished up 1.6% and the Nikkei Index finished near its session highs. Meanwhile, investors will be monitoring upcoming earnings reports for signs that companies can deliver, now that the dollar headwind has weakened significantly. The yield on the 10-year Treasury is trading up to 1.74%, gold is up half a percent, and crude oil is slightly higher following last week’s strong run-up.


  • Earnings season kicks off today. With Alcoa’s results, first quarter earnings season unofficially kicks off today. The season may bring little to get excited about with consensus estimates calling for a 7% year-over-year decline for S&P 500 earnings (according to Thomson), the biggest decline since 2009; and 7 of 10 sectors are expected to experience a decline. However, this quarter may mark an inflection point, supported by oil and U.S. dollar headwinds beginning to abate, and consistent with consensus estimates for the rest of this year. This week (April 11-15), 15 S&P 500 companies will report results, highlighted by the financials sector (JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo). See our earnings preview for our thoughts.
  • Sectors to watch. We believe energy, financials, and healthcare are the key sectors to watch this quarter. For energy, which is expected to suffer an unusual quarterly loss (not just a decline), we would like to see evidence of further U.S. production cuts beyond the 8% drop already experienced. The quarter may prove difficult again for financials given lower interest rates, financial market volatility, and slowing issuance activity. Healthcare, where results are likely to be strong again (consensus calling for a 4.5% gain), may benefit from the market’s increased focus on earnings and less on high drug price sound bites coming from the presidential campaign trail.
  • Global growth front and center this week. The pace and sustainability of global growth will get plenty of attention this week, as China reports its Q1 gross domestic product (GDP) data and the rest of its activity data for March, and the International Monetary Fund (IMF) releases the spring edition of its World Economic Outlook ahead of its annual meeting in Washington, DC. Please see our Weekly Economic Commentary (due out later today), “Gauging Global Growth: An Update 2016 & 2017,” for the recent changes to the consensus estimates for global GDP growth. With the Federal Reserve Bank (Fed) citing global growth concerns in recent weeks, the seven Fed speakers on this week’s docket will likely add to the conversation on global growth. On the data front in the U.S., the April Empire State Manufacturing Index, March data on retail sales, Consumer Price Index (CPI), and industrial production will compete for attention with the first few corporate earnings reports for Q1 2016.
  • The first of a series of Chinese economic data was released overnight. Inflation came in unchanged, and more or less at expectations of a 2.3% year-over-year increase. Outside of food, inflation was only up 1%. Producer prices inflation remained negative year over year; though at -4.3%, this was higher (less negative) than expected. Chinese investors tend to look at a lot of economic data largely in terms of how it may impact government policy, and are less focused on the data itself.
  • Opportunity in EM? Emerging market (EM) earnings expectations were significantly reduced last year and early in 2016. Analysts may have been overly pessimistic, which, combined with stability in commodity prices, has led to upward revisions recently. EM valuations appear attractive, so if earnings can come through, EM may be able to add to 2016 gains and reverse its multiyear performance downtrend. We discuss this potential opportunity in this week’s Weekly Market Commentary, due out later today.
  • Over the last month, the LPL Financial Current Conditions Index (CCI) rose 6 points to 189.The CCI remains near the low end of its range for the current expansion, indicating the economy is likely still experiencing below-trend growth. Improvements in two market-based indicators of financial stress (credit spreads and the VIX, a measure of market volatility) made the largest positive contributions to CCI growth over the last month, while retail sales and shipping traffic made the largest negative contributions. View the CCI.





  • Retail Sales (Mar)
  • Beige Book
  • IMF publishes Fiscal Monitor
  • Canada: Bank of Canada Meeting (No Change Expected)
  • Singapore: GDP (Q1)


  • CPI (Mar)
  • Lockhart (Dove)
  • IMF’s Christine Lagarde speaks on the Global Economic Outlook in Washington, DC
  • UK: Bank of England (No Change Expected)
  • China: GDP (Q1)
  • China: Industrial Production (Mar)
  • China: Retail Sales (Mar)


  • Empire State Manufacturing Index (Apr)
  • Consumer Sentiment and Inflation Expectations (H1 Apr)
  • IMF and World Bank hold their spring meetings in Washington, DC
  • Official campaign for UK’s EU referendum begins (Vote on June 23, 2016)


China: Property Price Indexes (Mar)


Click Here for our detailed Weekly Economic Calendar

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