Market Update: Monday, August 27, 2018

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Daily Insights

  • Outstanding earnings season by many measures. Second quarter numbers were strong even without the boost from the new tax law, while guidance was generally positive despite tariffs and trade policy uncertainty. With just 15 index constituents left to report, S&P 500 Index earnings rose 25% year over year, nearly matching the 26% growth rate from the quarter before. Even without the boost from tax cuts (estimated 6-7%) earnings growth came in at a still-outstanding 18-19%. In our latest Weekly Market Commentary due out later today, we recap an outstanding second quarter earnings season and highlight three key takeaways.

LPL Financial Research Earnings Season Dashboard 08-27-18

  • Trade tensions ease. Positive trade headlines provided a lift to the MSCI ACWI this morning, as reports suggest a NAFTA deal between the U.S. and Mexico may come as soon as today. Also, Chinese stocks, as measured by the Shanghai Composite, surged for a second straight day after China’s central bank hinted Friday that it would take steps to support the yuan in moves that could be seen as a concession and ease the U.S. and China’s future trade negotiations.

  • Finally. The S&P 500 finally closed at a new all-time high on Friday for the first time since late January. We’ve seen many signs that suggested this would eventually happen and fortunately it did. Now, the logical question is “what happens next?” Going back to 1950, we found there were 18 other times the S&P 500 went at least six months or more without a new high. The good news is the index was higher a year later 17 of those times. Today, on the LPL Research blog, we will take a closer look at this potentially bullish phenomenon.

  • Jackson Hole post-mortem. Federal Reserve (Fed) Chair Jerome Powell delivered a speech Friday at the Economic Policy Symposium in Jackson Hole, Wyoming. Powell’s comments leaned slightly dovish as he signaled flexibility in future monetary policy decisions, reassuring us that his approach will (hopefully) avoid a policy mistake. In this week’s Weekly Economic Commentary, due out later today, we analyze Powell’s pragmatic approach to monetary policy in the current environment, and how that approach could influence the Fed’s future decisions.

LPLResearch-Monitoring-the-Week-Ahead

Click Here for our detailed Weekly Economic Calendar

Tuesday

Wednesday

Thursday

  • Personal Income (Jul)
  • Personal Spending (Jul)
  • Germany: CPI (Aug)
  • Eurozone: Consumer Confidence (Aug)
  • Japan: Jobless Rate (Jul)
  • Japan: Tokyo CPI (Aug)
  • Japan: Industrial Production (Jul)
  • China: Mfg. & Non-Mfg. PMI (Aug)

Friday

 

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