Market Update: Mon, July 15, 2019 | LPL Financial Research

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Daily Insights

China posts its slowest growth in 27 years. China’s gross domestic product (GDP) grew 6.2% year over year in the second quarter, the slowest pace since 1992 and 0.2% below the first quarter growth rate.However, stocks are still well supported globally amid signs of improving growth in June from upbeat retail sales, industrial production, and fixed investment, as well as the prospects for more local stimulus. Stocks are also more focused on the Federal Reserve (Fed), ongoing U.S.-China trade negotiations, and the start of earnings season, muting financial markets’ reaction to this data.

Earnings season kicks off. Second quarter earnings season gets rolling this week with nearly 60 S&P 500 Index companies reporting results. Consensus estimates are calling for a slight year-over-year decline in S&P 500 earnings (source: FactSet) amid the downshift in U.S. and international economic growth, tariffs, and ongoing trade tensions. We expect a slight year-over-year gain and the eighth consecutive quarter of earnings growth. The big question for investors this quarter, though, is how much tariff costs are reflected in analysts’ earnings estimates. On today’s LPL Research Blog and Weekly Market Commentary, we preview second-quarter earnings season and share our outlook for profits in the second half of 2019.

Central bank check-in. Financial markets are focused on the Fed, but U.S. monetary policy is only part of the story. Central banks around the world are embarking on a marked policy shift as trade tensions pressure the global economy and government has become more intertwined in policy decisions. In this week’s Weekly Economic Commentary, we’ll check on recent events at the Fed and other global central banks, and highlight key themes we’re watching as central banks worldwide pivot to easing policy.

The week ahead. This week, in addition to monitoring the first wave of quarterly earnings reports, we will continue to look for clues for the course of future monetary policy in the Fed’s Beige Book and gauge the health of the U.S. economy with the Conference Board’s Leading Economic Index. Today’s China GDP report is the highlight of the economic docket overseas.

 

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