Market Update: Monday, April 16, 2018


Daily Insights

  • Earnings season kicks into high gear this week. Reports ramp up this week with about 15% of consensus S&P 500 Index firms reporting results. Despite the lackluster response to financial companies’ results on Friday, we continue to expect a strong earnings season, driven by solid global economic growth, robust manufacturing activity, a weaker U.S. dollar, and benefits from the new tax law. Consensus expects S&P 500 earnings to increase 18% year over year, with increases in all 11 S&P sectors. As a reminder, last week’s Weekly Market Commentary previews earnings season in more depth.

  • Stocks tend to hold up well when military actions are contained. Stocks opened solidly higher this morning following missile strikes on Syrian chemical weapons facilities over the weekend, while oil fell, suggesting market participants do not see the action as the start of a wider conflict. Historically, market reactions to contained military conflicts have tended to be limited and short-lived, with big declines almost always driven by deteriorating economic cycles.

  • Did stocks bottom? This week in our Weekly Market Commentary, we look at why longer-term market technicals suggest the overall bull market is alive and well. Additionally, multiple sentiment indicators are flashing levels of fear last seen at major market lows. This improves the chances that equities could be near a major low. Check out the LPL Research blog later today for a preview.

  • Inflation readings head higher, but not enough to impact the Fed. The latest readings for the Consumer Price Index (CPI) and the Producer Price Index (PPI) were released last week. Both moved higher, but remain at manageable levels. The easy year-over-year comparisons for CPI in March and over the coming few months may mean the recent move higher sticks in the near term. However, the Federal Reserve (Fed) generally looks beyond headline numbers and is well aware of transient factors that may impact inflation readings, leading us to maintain our expectation for a total of three rate hikes in 2018.  We discuss inflation in more detail in this week’s Weekly Economic Commentary, due out later today.

  • Retail sales and earnings season dominate the week’s calendar. Looking ahead, U.S. retail sales, industrial production data, and the Leading Economic Index are due out alongside the first big batch of earnings reports and several Fed speakers. The foreign docket is highlighted by Eurozone, German, and U.K. inflation; as well as first quarter gross domestic product (GDP) from China and trade data from Japan. This week will also likely bring trade headlines as NAFTA negotiations continue and Japanese Prime Minister Abe meets with President Trump in Florida.

  • Retail sales rebound. After a 0.1% dip in February, retail sales rose 0.6% month over month in March, ahead of expectations for a 0.4% rise. Excluding autos and gas, sales rose 0.3%, while the retail sales “control group” that goes into the GDP calculation rose 0.4%, matching estimates. Year-over-year comparisons accelerated across the board, jumping above 5%. The backdrop for consumer spending remains solid, despite the weather-driven slow start to the year, supported by tax cuts, steady job gains, rising wages, and still-low interest rates. Tax refunds may have also helped boost retail sales in March.


Click Here for our detailed Weekly Economic Calendar


  • Retail Sales (Mar)
  • Treasury International Capital Flows (Feb)
  • China: GDP (Q1)
  • China: Retail Sales (Mar)
  • China: Industrial Production (Mar)


  • Industrial Production & Capacity Utilization (Mar)
  • Italy: CPI (Mar)
  • UK: Jobless Claims (Mar)
  • UK: Unemployment Rate (Feb)
  • Japan: Industrial Production & Capacity Utilization (Feb)
  • Japan: Trade Balance (Mar)
  • Japan: Imports & Exports (Mar)
  • China: New Loan Growth & Money Supply (Mar)


  • Beige Book
  • UK: CPI & PPI (Mar)
  • Eurozone: CPI (Mar)
  • NZD: CPI (Q1)
  • Bank of Canada: Rate Decision





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