Good earnings season overall, with a caveat. A large loss from aerospace giant Boeing prevented S&P 500 Index earnings from improving last week as earnings season rolled on. Overall index earnings are tracking at a 2.6% year-over-year decline (source: FactSet), in line with June 30 consensus estimates. However, 77% of S&P 500 companies have beaten estimates, which is excellent, especially considering tariff costs and ongoing trade uncertainty, slowing global growth, and a strong U.S. dollar. Excluding Boeing’s results, we think the chances are good that second quarter earnings end up growing when all results are in.
Big week ahead. The week ahead will be highlighted by the Federal Reserve’s (Fed) policy meeting on Tuesday and Wednesday, with speculation that the first rate cut in 10 years is likely on tap. Economic data will be highlighted by Friday’s jobs report and the Institute for Supply Management’s (ISM) manufacturing Purchasing Managers’ Index (PMI) on Thursday. We’ll also get updates on personal income and spending, home prices, consumer confidence, and construction spending. On the global front, we’ll get policy decisions from the Bank of Japan on Tuesday and the Bank of England on Thursday. Investors are watching for any developments in U.S.-China trade talks, which are slated to kick off on Tuesday.
The inaugural rate cut. A Fed rate cut now would be uncharted territory for much of Wall Street, as well as the current set of Fed central bankers. Because of this, we’ve heard several questions about what we’ll see in Wednesday’s rate announcement and post-meeting press conference. In this week’s Weekly Economic Commentary, we outline our expectations for how policymakers will handle a rate cut and what looser policy could mean for future monetary policy.
Investment implications. A Fed rate cut could also have several investment implications. We have written a fair amount about the Fed’s U-turn in policy stance this year and its potential positive impact on the stock market broadly. In this week’s Weekly Market Commentary and on the LPL Research blog later today, we’ll highlight the potential beneficiaries of the transition to a new monetary policy regime for growth stocks, large caps, industrials, emerging markets, and gold.
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.
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.
Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
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 performance referenced is historical and is no guarantee of future results.
This research material has been prepared by LPL Financial LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL is not an affiliate of and makes no representation with respect to such entity.
|Not FDIC or NCUA/NCUSIF Insured | No Bank or Credit Union Guarantee | May Lose Value | Not Guaranteed by Any Government Agency | Not a Bank/Credit Union Deposit
If your advisor is located at a bank or credit union, please note that the bank/credit union is not registered as a broker-dealer or investment advisor. Registered representatives of LPL may also be employees of the bank/credit union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, the bank/credit union. Securities and insurance offered through LPL or its affiliates are:
For Public Use – Tracking # 1-877065