Market Update: Thursday, April 20, 2017


  • Markets look to bounce back as earnings continue. (10:10am ET) U.S. stocks are higher this morning and are looking to reverse Wednesday’s losses in the S&P 500 and Dow. Major indexes gapped higher to begin yesterday, only to fall throughout the session and finish mixed; gains in the healthcare sector (+0.3%) helped the Nasdaq (+0.2%) stay in the green. Asian indexes were little changed overnight, though the Hang Seng jumped 1.0%; Japan’s Nikkei closed flat despite the release of trade data, which showed exports grew the most in two years. European stocks are similarly unchanged (STOXX 600 +0.1%) as uncertainty weighs ahead of this weekend’s first round elections in France. Meanwhile, WTI crude oil ($50.38/barrel) is slightly lower after yesterday’s more than 3% drop, COMEX gold is unchanged at $1283/oz., and the yield on the 10-year Treasury is up one basis point (0.01%) to 2.23%.


  • Weekly jobless claims tick higher. Data released this morning on initial jobless claims for the week ending April 15 showed the number of people seeking unemployment benefits rose 10,000 to 244,000, slightly missing consensus forecasts of 241,000, as the total moved higher for the first time in four weeks. Continuing claims fell 49,000 to 1.98 million, while the four-week average dipped 4,250 to 243,000. Jobs data continue to point toward a gradual tightening of the labor market with claims coming in below 300,000 for 111 weeks in a row, consistent with a healthy labor market and continued economic growth.
  • Financials are an early earnings winner. With 57 S&P 500 companies having reported first quarter results, financials are an early overall winner having added 4% to its initial consensus earnings growth forecast of 15.6% (Thomson data). The S&P 500 earnings beat rate thus far of 75%, which has the index’s earnings tracking to a 10.8% increase versus prior expectations of +10.2%, reflects a good start overall. S&P 500 estimates for the second quarter have only dipped 0.4%, a relatively good result, while financials’ estimates have only fallen marginally. The bar for consumer discretionary in Q1 has been lowered in recent weeks, partly reflecting pressure on retailers and following a small handful of consumer company results.
  • Oil push and pull continues. WTI crude oil fell by $2 per barrel or about 4% yesterday, its worst drop in six weeks, and is slightly lower in early trading this morning. A surprise increase in weekly gasoline inventories drove yesterday’s decline, while comments from OPEC members, including most importantly Saudi Arabia, about extending production cuts at the end of May are providing support today. Meanwhile, concerns about lingering oversupply and increased U.S. shale production, and seasonality as summer driving season approaches, will continue to push and pull on oil in the coming weeks and months and will, in our view, make a breakout above $60 difficult to achieve without a meaningful pickup in global economic growth. We still see modest upside to the mid-50s or possibly a bit higher in the short to intermediate term but expect a bumpy ride.
  • The first 100 days. President Trump’s first 100 days is right around the corner on April 29. One question we’ve received is: Where does his first 100 days rank? Today on the LPL Research blog we take a closer look at this and what the first 100 days could tell us about what could happen the rest of Trump’s time in office.


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