Stocks opened little changed. Market participants will remain focused on whether lawmakers in Washington, DC, can agree on a fifth coronavirus relief package. Meanwhile, several executive actions taken by the White House to provide relief without involving Congress sparked debates about the legality and logistics of the move. LPL Research continues to expect an agreement soon. US-China tensions remain high, with TikTok, Tencent, and tit-for-tat Hong Kong sanctions grabbing headlines. China’s Shanghai Composite rose 0.8%, Hong Kong’s Hang Seng dipped 0.6%, and Japan’s markets were closed for holiday. European stocks were slightly higher in midday trading.
Earnings bar too low. S&P 500 Index earnings for the second quarter are tracking to a 34% year-over-year decline, an impressive 11 percentage points above estimates when earnings season began. The earnings beat rate (83%) and average positive surprise (23%) are both well above historical averages. Forward 12 months’ estimates have risen 1.5% since July 1, an indication that second half estimates may be too low.
Week ahead. This week’s economic calendar features retail sales for July on Friday. Other data of note includes today’s Job Openings and Labor Turnover (JOLTS) report, Tuesday’s National Federation of Independent Business (NFIB) Small Business Index, consumer and producer inflation on Tuesday and Wednesday, jobless claims on Thursday, and University of Michigan consumer sentiment on Friday. Only 11 S&P 500 companies are scheduled to report earnings this week as second quarter earnings season winds down.
COVID-19 news. New daily cases in the United States jumped 6.3% on Sunday compared with the prior week. The 7-day average has fallen by double digit percentages for five straight days and hospitalizations have been falling steadily since the recent peak on July 25 (source: COVID Tracking Project). Australia had its deadliest day ever, according to Johns Hopkins data, while the UK and Italy affirmed plans to open schools in September, according to a Bloomberg report.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
All index and market data are from FactSet and MarketWatch.
This Research material was prepared by LPL Financial, LLC.
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.
- Not Insured by FDIC/NCUA or Any Other Government Agency
- Not Bank/Credit Union Guaranteed
- Not Bank/Credit Union Deposits or Obligations
- May Lose Value
For Public Use – Tracking 1-05042447