Market Update: Monday, May 02, 2016


  • U.S., Europe tracking higher; Asia finishes down. Stocks in the U.S. and Europe are moving higher in Monday trading as they look to rebound after posting losses on Friday. This comes as oil moves off overnight lows and despite a sell-off in Asian securities. The sell-off was led by a 3.1% tumble in Japan’s Nikkei Index, which fell as the yen rose to 18-month highs. Disappointing manufacturing data out of China also weighed on sentiment, although losses were modest on the Shanghai Composite. Meanwhile, COMEX gold is above $1300/oz., a level not seen in more than a year, and the yield on 10-year Treasuries continues to move sideways after finishing last week at 1.83%.
  • With nearly two-thirds of S&P 500 companies having reported, Q1 2016 earnings numbers are somewhat encouraging versus expectations. S&P 500 earnings for Q1 are tracking to a 5.7% decline, about 2% ahead of estimates when earnings season began (Thomson data). Consumer discretionary, industrials, and materials have produced the biggest upside relative to prior estimates, while energy, financials, and utilities have missed by most. After a slow start, earnings are on track to deliver a 3-5% upside, consistent with the historical pattern, and marginal year-over-year growth excluding the energy sector. This week 124 S&P 500 companies report results.



  • Earnings revisions provide a small victory. Overall, we consider the modest downward revisions to S&P 500 earnings estimates for the balance of the year a small victory. Excluding the technology sector, among this season’s disappointments, Q2 2016 (current quarter) estimates would have actually risen since earnings season began, a rare accomplishment. A weaker U.S. dollar has helped, while higher oil prices have not–the energy sector’s earnings estimate for Q2 has been revised down by 2%. Industrials and financials have seen the biggest increases in Q2 estimates, although both sectors have seen Q3 estimates fall.
  • It’s jobs week. The April employment report (Friday, May 6) highlights the week’s economic and policy calendar, although the April readings on vehicle sales and Institute for Supply Management (ISM) will get plenty of attention. There are 15 Federal Reserve Bank (Fed) officials slated to speak this week, highlighted by New York Fed President Bill Dudley either today or tomorrow. It’s relatively quiet overseas this week, with China releasing its April data set starting at the end of the week. Please see our Weekly Global Economic and Policy Calendar for details.
  • The impact of oil on the consumer in this week’s Weekly Economic Commentary. Some market observers are suggesting that consumers will get crunched now that WTI crude oil prices have moved off multiyear lows. We examine what consumers did with their nearly $200 billion windfall from falling oil prices and what they might do next in this week’s Weekly Economic Commentary, due out later today.
  • Sell in May, with a couple twists, in this week’s Weekly Market Commentary. May is upon us, which every year sparks a barrage of Wall Street commentaries and investor questions about the popular stock market adage “sell in May and go away.” In this week’s Weekly Market Commentary (due out later today), we tackle this widely cited seasonal pattern, with a couple of twists.



  • ISM Mfg. (Apr)
  • ECB’s Draghi Speaks in Frankfurt
  • China: Caixin Mfg. PMI (Apr)


  • Vehicle Sales (Apr)
  • Mester (Hawk)


  • ADP Employment (Apr)
  • ISM Non-Mfg. (Apr)
  • Productivity (Q1)


  • Bullard (Hawk)


  • Employment Report (Apr)


  • Employment Report (Apr)

Click Here for our detailed Weekly Economic Calendar

Important Disclosures

The economic forecasts set forth in the presentation may not develop as predicted.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

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