Market Update: S&P 500 on its hottest streak of the year

MacroView_header

Daily Insights

  • Excellent Q2 earnings. With 404 S&P 500 Indexcompanies having reported second quarter 2018 earnings results, a solid 79% have exceeded earnings targets, delivering robust 23.5% year-over-year growth on a nearly 3% upside surprise. Revenue growth of 9.2% is a solid 1.1% above expectations as of quarter end. Though the amount of earnings upside is typical, at this stage of the earnings cycle amid high expectations and potential margin pressures, we consider this an excellent result.

  • Tariffs having little impact on overall earnings guidance. Forward four quarter estimates have impressively risen 0.6% during reporting season with over 80% of results in, breaking the historical pattern of 2-3% declines. The resilience of analysts’ estimates with less than 100 S&P 500 constituents left to report (47 coming this week) suggests tariffs have had little broad impact on companies’ outlooks.
  • S&P 500 on its hottest streak of the year. The S&P 500 capped its fifth straight positive week on Friday, the first such streak since the week ending Dec. 22, 2017. Five-week winning streaks are a rare feat of strength for the S&P 500: the index has posted 8 five-week winning streaks since February 2013 (and five 6-week winning streaks over that same period). The S&P 500 gained 0.8% amid a busy week for investors as several major central banks (including the Fed) held monetary policy meetings, 141 S&P 500 companies reported earnings, and new developments arose in the U.S.-China trade skirmish. Investors will have fewer catalysts to trade on this week so six straight weeks of gains may be elusive, but overall, we still expect continued strength in U.S. equities through the rest of the year.
  • Light economic calendar this week. Wednesday’s oil inventory reports will be on investors’ radars, along with U.S. consumer and producer inflation later in the week. Overseas, China’s trade balance figures and foreign reserves will be worth monitoring, but the global docket includes other important indicators, which you can access on our Weekly Global Economic & Policy Calendar.
  • Payrolls miss estimates, but job market tightening still evident. July payrolls were softer than consensus estimates, but the underlying forces of the U.S. job market show a continuation of tightening we’ve seen as the economic cycle has matured. In this week’s Weekly Economic Commentary due out later today on lpl.com, we break down the July jobs report and analyze the implications of the current labor market on the U.S. economy and future monetary policy.
  • LPL Research podcast for everyone! Chief Investment Strategist John Lynch and Senior Market Strategist Ryan Detrick recorded two podcasts last week at LPL’s Focus conference, the first in a new series that will be accessible to the public. Everyone can access Monday’s recording here and Tuesday’s recording here.

MonitoringWeek_header

Click Here for our detailed Weekly Economic Calendar

Monday

  • Germany: Factory Orders (Jun)
  • China: Foreign Reserves (Jul)

Tuesday

  • Germany: Industrial Production (Jun)
  • Japan: Current Account Balance (Jun)
  • China: Imports (Jul)
  • China: Exports (Jul)

Wednesday

  • Japan: Core Machine Orders (Jun)
  • China: PPI (Jul)

Thursday

  • PPI Final Demand MoM (Jul)
  • Wholesale Inventories MoM (Jun)
  • Japan: PPI (Jul)
  • Japan: GDP (Q2)
  • China: Money Supply (Jul)

Friday

  • CPI MoM (Jul)
  • CPI YoY (Jul)
  • CPI Ex Food & Energy MoM
  • CPI Ex Food & Energy YoY
  • France: Industrial Production (Jun)
  • UK: Industrial Production (Jun)
  • UK: GDP (Jun)

 

IMPORTANT DISCLOSURES
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.
All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
All 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.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
All performance referenced is historical and is no guarantee of future results.
This research material has been prepared by LPL Financial LLC.
To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.
The investment products sold through LPL Financial are not insured deposits and are not FDIC/NCUA insured.  These products are not Bank/Credit Union obligations and are not endorsed, recommended or guaranteed by any Bank/Credit Union or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.
Index data obtained via FactSet
Member FINRA/SIPC
For Public Use – Tracking # 1- 757033 (Exp. 8/19)
2018-08-06T11:25:52+00:00By |Categories: Market Update|