Stocks edge lower as coronavirus remains in focus. After the biggest weekly gain for the S&P 500 Index in eight months, the major averages are starting this week with modest losses. Investors remain squarely focused on the future path of the coronavirus outbreak. Markets appear to be pricing in a fairly optimistic containment scenario—let’s hope they’re right. European markets are lower in midday trading overseas, while Asian markets ended mixed—China’s Shanghai Composite gained 0.5% while Japan’s Nikkei and Hong Kong’s Hang Seng each lost about one half percent.
Earnings season rolls on. With 325 S&P 500 companies having reported, fourth quarter 2019 S&P 500 earnings growth is tracking to a 0.7% year-over-year increase, up about 1% over the past week. Earnings estimates have held firm despite the coronavirus outbreak’s impact on Chinese economic output and China-tied supply chains. S&P 500 earnings consensus earnings per share (EPS) estimates for 2020 have fallen just 0.6% since December 31 (source: FactSet), helping to solidify the earnings outlook amid progress on trade and evidence of stabilizing global growth in recent months. Earnings season continues this week with 66 S&P 500 companies slated to report.
The week ahead. This week’s U.S. economic calendar features key data points on inflation and consumer spending. The consumer price index (CPI) will come Thursday, with core CPI expected at 2.2% per Bloomberg consensus, down from 2.3% in January. On Friday, January retail sales will be reported, with consensus at 0.3% month over month (source: Bloomberg). Meanwhile, Federal Reserve Chair Powell provides congressional testimony and New Hampshire Democratic primary voters head to the polls.
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