Stocks selling off globally. Stocks opened lower this morning, adding to Friday’s declines amid concerns about the risks associated with reopening economies, questions about the justification of April’s rally, and increased US-China tensions. European equities fell sharply in midday trading overseas, while markets in Hong Kong and Seoul were also lower. Markets in Japan and China were closed for holiday.
As good as we could have hoped. Earnings season has passed the halfway point, and as shown in the LPL Earnings Season Dashboard, the percent of companies beating revenues and earnings are both very respectable at over 60%, despite the significant drop-off in economic activity late in the first quarter. The 15% year-over-year decline in S&P 500 earnings hasn’t changed over the past two weeks, while estimates over the next four quarters have been reduced by 15%, less than in the typical recession.
Central banks are all in. Global central banks are doing all they can to help bring back confidence and liquidity. Last week, multiple central banks had policy meetings, and it’s clear low rates are here to stay and more fiscal stimulus is likely. We discuss this later today on the LPL Research blog.
The week ahead. Friday is the big day this week as investors will finally receive the much-anticipated unemployment rate following a brutal six-week stretch in which 30 million US citizens filed for unemployment benefits. Bloomberg surveys currently estimate 16% of the workforce is unemployed. Thursday will bring the March durable goods orders release, which measures domestic manufacturers’ contracts for delivery of factory hard goods. A bevy of Markit Purchasing Managers’ Index (PMI) data headlines the international slate in an otherwise quiet week around the world.
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