An impressive run. Optimistic U.S.-China trade headlines are lifting equities around the globe this morning. U.S. stocks are higher, adding to gains after the S&P 500 Index notched its fourth straight weekly increase. The Stoxx 600 Index of European equities is poised to close at a four-year high, while the Nikkei 225 Index of Japanese stocks is testing 12-month highs. Stocks globally have made an impressive run over the past month considering the long list of unresolved trade and geopolitical issues. We’re encouraged by recent strength, but we also wouldn’t be surprised to see some volatility here.
Strong week of earnings. With about 360 S&P 500 companies having reported, third-quarter 2019 earnings growth is tracking to a 2.8% year-over-year decline, a full percentage point improvement over the prior week. The technology and healthcare sectors have produced the biggest upside surprises thus far, with stronger earnings gains coming from more domestic-focused companies than more geographically diverse businesses. S&P 500 earnings estimates for the next 12 months have fallen 1.3% since September 30, which is normal at this stage of earnings reporting season. Trade uncertainty, weak U.S. manufacturing data, and slowing international growth have curbed earnings prospects. About 80 S&P 500 companies are scheduled to report quarterly results this week as third-quarter earnings season winds down.
Best 6 months. November through April historically have been the best six months of the year to own stocks, and this week’s Weekly Market Commentary: Best Six Months of the Year explains why the streak may continue. It also covers recent S&P 500 highs and Fed rate cuts.
Highs and lows. Last week U.S. stocks reached new highs in their fourth straight week of gains, and global equities rallied. On the other hand, the U.S. dollar slid and oil prices declined. Find out how all the major indexes performed in our new Weekly Market Performance: New Highs Finally.
The week ahead. This week, investors will get more details on the health of the services sector from the Institute for Supply Management and Markit on November 5. Nonfarm productivity and unit labor costs data is also slated to be released November 6. On the international front, investors will be parsing through Markit global services data, which will come out on November 6. The Bank of England is also scheduled to announce a policy decision November 7.
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