Stocks continue their slide. U.S. stocks continued their slide last week, as the S&P 500 Index fell for the third straight week. Global uncertainty has especially weighed on larger, multinational companies: the Dow posted its fifth straight down week last week, its longest losing streak since June 2011. There haven’t been any significant developments in trade talks recently, just back-and-forth threats between the U.S. and China. However, the barrage of headlines has been enough to knock U.S. stocks off of record highs.
Brexit developments. The United Kingdom’s populist pro-Brexit party snapped up about a third of the votes in Parliament elections over the weekend (according to polls), just a few days after British Prime Minister Theresa May announced her resignation. May’s departure and more pro-Brexit officials in Parliament have raised the stakes for Brexit, as both developments could increase political pressure for a quicker exit from the European Union. A no-deal Brexit is the worst-case scenario for the global economy, although we still believe this outcome is unlikely.
Earnings season winds down. With just 17 S&P 500 companies left to report, first quarter 2019 earnings are up 1.5% year over year, 3.6 percentage points above January 1, 2019 estimates (source: Refinitiv). Revenue growth of 5.6% is also nicely above prior estimates. Forward earnings estimates have fallen by a below-average 0.6% since April 1. This week, nine S&P 500 companies will report quarterly results.
The week ahead. As earnings season winds down, investors will likely be more focused on macro developments, including economic reports. In the U.S., the first revision of first-quarter gross domestic product is the highlight of this week’s economic slate. Core personal consumption expenditures data for April, which will be released May 31, should provide more color on the state of U.S. inflation. Overseas, investors will be watching the May update of China’s official Purchasing Managers’ Index, especially after recent economic data out of China has been disappointing.
Five forecasters. It’s been a difficult year for Wall Street forecasts, and near-term forecasting has been a futile effort this year. However, our Five Forecasters, a compilation of our favorite longer-term economic indicators, have been surprisingly resilient throughout this year’s rocky start. We’re highlighting all five of them and their economic and market signals in this week’s Weekly Economic Commentary and Weekly Market Commentary, as well as on the LPL Research blog.
- S&P Core Logic Case-Shiller Home Prtice Index (MoM, Mar)
- Conference Board Consumer Confidence Index (May)
- Dallas Fed Manufacturing Activity Index (May)
- Eurozone Economic Confidence Index (May)
- Eurozone Consumer Confidence (May)
- Germany Unemployment Claims Rate (May)
- GDP Report (First Revision, Q1 2019)
- Initial Jobless Claims (May 25)
- Pending Home Sales (MoM, April)
- Japan Jobless Rate (Apr)
- Japan Tokyo CPI Report (May)
- Japan Industrial Production (Preliminary, Apr)
- Japan Retail Sales (Apr)
- China Manufacturing PMI (May)
- Personal Income (MoM Apr)
- Personal Spending (MoM, Apr)
- Core PCE (MoM Apr)
- University of Michigan Sentiment Index (May)
- Japan Consumer Confidence Index (May)
- Germany CPI Report (Preliminary, May)
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.
All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
All company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All performance referenced is historical and is no guarantee of future results.
This research material has been prepared by LPL Financial LLC.
To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.
The investment products sold through LPL Financial are not insured deposits and are not FDIC/NCUA insured. These products are not Bank/Credit Union obligations and are not endorsed, recommended or guaranteed by any Bank/Credit Union or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.
Index data obtained via FactSet
For Public Use – Tracking # 1-857143 (5/20)