Earnings update. Third quarter S&P 500 Index earnings barely budged after last week’s wave of retail results. S&P 500 profits are tracking to a 2.2% year-over-year decline last quarter, with over 480 S&P 500 companies having reported. While that year-over-year change is nearly 2 percentage points higher than September 30’s estimate, the upside is slightly less than recent trends. The consensus S&P 500 earnings estimate for the next 12 months has fallen 2% since September 30.
Earnings bottom? Third quarter earnings growth was hardly worth getting excited about; however, we think the third quarter may have marked a trough in earnings growth for several reasons. Find out why in this week’s Weekly Market Commentary: Have We Hit the Earnings Bottom?
Stocks Take a Pause. Last week U.S. stocks took a pause, and the S&P 500 Index declined for the first time in seven weeks. The Nasdaq led returns among major indexes we track. U.S. fixed income gained on the week. Find out how all the major indexes performed in our Weekly Market Performance report dated Nov. 22.
Progress on trade. U.S. stocks are higher this morning after China announced it would tighten rules on intellectual property, a step forward in one of the United States’ primary focal points in trade discussions. Investors are searching for direction after the S&P 500 Index’s first weekly slide since early October. Equities may take more cues from trade and geopolitical headlines as earnings season winds down, so investors should be prepared for potential volatility as stock indexes hover around record highs.
The week ahead. There are several economic reports to watch in this shortened holiday week. The Conference Board Consumer Confidence Index’s November update will be released on Tuesday. Investors will get their second look at third-quarter gross domestic product on Wednesday, along with October core Personal Consumption Expenditures (PCE) data and preliminary October durable goods data. The Federal Reserve (Fed) will also release its latest edition of the Beige Book on Wednesday. U.S. stock and bond markets will be closed all day Thursday and will close early on Friday in observance of Thanksgiving.
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