Market Update: Tuesday, October 23, 2018

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Daily Insights

  • (NEW) LPL Market Signals Podcast. In the latest episode of the Market Signals Podcast, listen to Portfolio Manager Jeff Buchbinder and Chief Investment Strategist John Lynch discuss the signs pointing to economic growth in the third quarter and into 2019. Market Signals by LPL Financial is now available on iTunes, Google Play and Spotify. Please join our discussion on social via #LPLMarketSignals.

  • Risk-off trading continues amid a confluence of global concerns. Stocks in Asia started a broad sell-off in Tuesday’s sessions with investors remaining averse to risk despite more formal announcements from Chinese officials surrounding specific policy initiatives to support the economy and financial markets. European equities followed suit with anxiety heightened over Italy’s budget conflict with the European Union, which has investors, and some officials, on edge over the potential impact to the country’s financial stability and the EU’s willingness to step in to provide support, if necessary. Add to that the ongoing debate over the series of events that lead to a Saudi journalists death in Turkey, which is weighing on U.S.-Saudi relations and helping to spur volatility in the oil patch as investors try to gauge the Saudi Arabia’s willingness to ramp up production as the U.S. looks to impose fresh sanctions on Iran’s crude exports next month.

  • U.S. stocks tracking global losses as rising costs overshadow earnings, revenue growth. Cost pressures on industrial companies are getting the most attention today after poorly-received results from machinery giant Caterpillar. This is not the first time this earnings season an industrial company has cited cost pressures-including tariffs-as a challenge, and it probably won’t be the last given industrial companies’ exposure to global trade. Still, in the near term, we expect capital spending to pick up, the U.S. and China to reach a trade agreement, and for the sector to produce continued strong earnings growth, supporting our positive sector view. We cited profit margins and tariffs as keys to watch this earnings season in our latest Weekly Market Commentary.

  • Third-quarter GDP likely to show moderately strong output. We expect consumer spending, roughly 70% of gross domestic product (GDP), to be yet another strong driver of growth this quarter as consumers remain confident in the U.S. economy. However, economists will be scrutinizing data related to inventories and net exports as they monitor for any supply chain disruptions stemming from the U.S.-China trade spat. For more details on what we’ll be watching in the third-quarter GDP release, check out this week’s Weekly Economic Commentary, available now; and look for our post this afternoon on the LPL Research blog.

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Click Here for our detailed Weekly Economic Calendar

Tuesday

Wednesday

  • Markit PMI — Manufacturing (Preliminary, Oct)
  • Markit PMI — Services (Preliminary, Oct)
  • New Home Sales (MoM, Sep)
  • Federal Reserve’s Beige Book (N/A)
  • Japan Leading Index (Aug)
  • Japan PPI Report (Sep)

Thursday

Friday

  • GDP Report (QoQ, 3Q)
  • Core PCE (QoQ, 3Q)


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