Daily Insights
Stocks rebound as outbreak fears linger. U.S. stocks are solidly higher this morning after the first back-to-back weekly losses since August 2019. Containment efforts are ongoing as coronavirus cases in China continue to increase, though markets may be taking some comfort in the limited impact outside of mainland China. China’s Shanghai Composite reopened after the Chinese New Year holiday and lost nearly 8%, its biggest decline in more than four years, even as the People’s Bank of China cut rates and injected cash into its banking system.
Solid earnings results overshadowed. With 228 S&P 500 Index companies having reported quarterly results, fourth quarter 2019 earnings growth is tracking to a 0.3% year-over-year decline, 1.6% above the prior week. S&P 500 earnings estimates for 2020 are unchanged since December 31, buoyed by progress on trade and stabilizing global growth, and they help to solidify the earnings outlook. Earnings season continues this week with 94 S&P 500 companies slated to report quarterly results. See our Earnings Season Dashboard for updates later today.
Outbreak of volatility. The coronavirus outbreak has led to some volatility in the markets, but history says the market impact from similar events has tended to be modest and short-lived. We provide historical perspective in our Weekly Market Commentary: Assessing Coronavirus Outbreak.
Market symptoms. U.S. stocks fell for the second straight week last week, and all four U.S. indexes we track fell during the week. Fixed income prices benefited from a continued rush to safe-haven assets. Review all the major equity, fixed income, commodity, and currency indexes in Weekly Market Performance: Coronavirus Outbreak Intensifies, dated as of market close, Jan. 31. (client approved)
The week ahead. This week’s U.S. economic calendar will bring several key reports. Today investors will get the January Institute for Supply Management (ISM) Purchasing Managers’ Index (PMI) for manufacturing, which will be followed by the services report on Wednesday. Preliminary labor cost and productivity data for the fourth quarter of 2019 will be reported on Thursday, followed by Friday’s widely followed payroll employment report for January (Bloomberg consensus is 156,000 new jobs created). Manufacturing PMIs and wholesale inflation in Europe headline the international economic calendar.
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