Earnings season producing modest–but many–upside surprises. With 200 S&P 500 Index companies having reported so far, third quarter 2019 earnings growth is tracking to a 3.8% year-over-year decline. That pace is just 1% above September 30, 2019, levels, a small amount of upside considering nearly 80% of S&P 500 companies have beaten forecasts. In terms of guidance, estimates for the next 12 months have fallen 1% since September 30–a typical quarterly reduction–amid trade uncertainty, softening U.S. manufacturing activity, and slowing international growth.
Poised for record highs. Stocks are higher this morning on another wave of optimistic trade and geopolitical headlines, and the S&P 500 is poised to notch its first record high since July. Today, stocks are rising globally after the European Union (E.U.) granted a three-month extension to the United Kingdom’s deadline to leave the E.U. (Brexit). U.S. stocks also got a sizeable boost on October 25 after U.S. officials announced they were close to finalizing some sections of the limited trade agreement with China.
Market could play tricks. The stock market has been hovering near record highs despite an assortment of economic and geopolitical risks. In the spirit of Halloween, in this week’s Weekly Market Commentary: Market Tricks and Treats, we discuss some of the factors that might spook the markets between now and year-end, including trade tensions, bond markets, U.S. manufacturing activity, fear of a Fed policy misstep, and global geopolitical concerns.
S&P 500 hits record highs. U.S. stocks gained for a third straight week, and on Friday the S&P 500 Index briefly pushed past its July record closing high before closing slightly below that level. Weekly Market Performance: S&P 500 Brushes Record High covers the major indexes for equities, sectors, fixed income, currency, and commodities.
The week ahead. This week’s calendar is unusually packed. The most notable event is the Federal Reserve’s (Fed) policy announcement on October 30, followed by Fed Chair Jerome Powell’s post-meeting press conference. U.S. investors will also get a look at updated Conference Board Consumer Confidence Index data (on October 29), Personal Consumption Expenditures (PCE) data (October 31), third-quarter gross domestic product (October 31), ISM manufacturing data (November 1), and the October nonfarm payrolls report (November 1).
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