Worst week of the year. U.S. stocks slid more than 2% last week in the worst week since December amid escalating U.S.-China trade tensions. The most globally exposed sectors — namely materials, industrials, and technology – paced last week’s declines. The pullback has been modest up until this point, as the S&P 500 Index has not had as much as a 3% pullback yet this year. However, the index will likely get there based on today’s market action. In today’s Weekly Market Commentary, we put this selloff in perspective and discuss prospects for a trade deal in light of the events of the past week. On the LPL Research blog later today, we’ll elaborate more on the sectors leading losses.
More good earnings results. With 90% of S&P 500 companies’ results in, first quarter 2019 earnings for the S&P 500 are up 1.3% year over year, 3.4 percentage points above estimates as of January 1 (source: Refinitiv, formerly Thomson Reuters). FactSet data essentially points to flat earnings versus the year-ago quarter, but with the same upside relative to consensus. Importantly, breadth of earnings has been better than that with median company earnings up 3 percentage points more than the market cap weighted result. Revenue is impressively tracking 0.5 percentage points above initial forecasts.
Estimates continue to hold up well. Forward earnings estimates have fallen by a below-average 0.4% during earnings season, reflecting the better-than-feared global growth environment. China tariffs present downside risk to 2019 earnings, but we remain optimistic about an eventual deal.
- Japan Leading Index (Preliminary, Mar)
- Japan Coincident Index (Preliminary, Mar)
- NFIB Small Business Optimism Index (Apr)
- Import Price Index (Apr)
- Export Price Index (Apr)
- Germany CPI Report (Apr)
- Eurozone Industrial Production (Mar)
- China Industrial Production (Apr)
- China Surveyed Jobless Rate (Apr)
- Retail Sales (Apr)
- Industrial Production (Apr)
- Germany GDP Report (Preliminary Q1)
- Eurozone GDP Report (Preliminary Q1)
- Japan PPI Report (Apr)
- Housing Starts (Apr)
- Building Permits (Apr)
- Philadelphia Fed Business Outlook (May)
- Initial Jobless Claims (May 11)
- Leading Index (Apr)
- University of Michigan Sentiment Index (Preliminary May)
- Eurozone CPI Report (Apr)
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Index data obtained via FactSet
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