Better than feared. With over 450 S&P 500 Index companies having reported, third quarter 2019 earnings growth is tracking to a 2.4% year-over-year decline, a 0.4% improvement over the prior week and roughly 2 percentage points above September 30 expectations (source: FactSet). The technology and healthcare sectors have produced the biggest upside surprises. Guidance has been in line with recent trends-consensus S&P 500 earnings estimates for the next 12 months have fallen 1.5% since September 30. Trade uncertainty, U.S. manufacturing weakness, and slowing international growth have curbed earnings prospects.
Stocks fall from record high. U.S. stocks are lower this morning on pessimistic trade and geopolitical headlines. Investors are stepping back after an exciting few weeks for equities. The S&P 500 has risen for five consecutive weeks, its longest winning streak since February through early March. The benchmark has also closed at six record highs in the past two weeks amid encouraging trade developments, better-than-expected earnings, and signs of recovery in global economic data.
Impressive run in global stocks. If you’ve focused on U.S. stocks lately, you may have missed an especially impressive rally in global equities. The MSCI ACWI Index, which tracks stocks in the United States, developed international, and emerging markets, also rallied for five straight weeks. That’s the first time both the global benchmark and the S&P 500 have posted five straight weekly gains since December 2017. Regionally, the Euro STOXX 50 Index hit its highest level in more than two years, and the Japanese Nikkei climbed to levels not seen since November 2018.
A Tale of Two Economies. It’s been a tale of two economies in 2019 — strong consumer spending and weak capital expenditures. Read more about this dichotomy and what it may mean for 2020 in the new Weekly Market Commentary.
Market Rally Continues. U.S. stocks rallied for the fifth consecutive week, with trade taking a front seat, while gold lost a little of its luster. Friday’s Weekly Market Performance reviews the major equity, sector, currency, commodity, and fixed income indexes.
The week ahead. In the United States, investors will be watching several inflation reports. October Consumer Price Index data is scheduled to come out on November 13, followed by October Producer Price Index data on November 14 and export/import price data on November 15. October retail sales data, which will contain important details about consumer spending, will be released on November 15. Internationally, the docket includes preliminary third quarter gross domestic product (GDP) numbers from Japan and Europe, along with industrial production data from the Eurozone, Japan, and China.
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