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Market Wants To See Good Earnings Instead of Trade War


As a slew of S&P 500 companies readies their report earnings, stocks will try to break the all-time-highs this week, with the S&P 500 being 1% below its all-time high. With the companies posting surprisingly better outcomes lifting the index last week. The improving disposition around the US-China trade negotiations and Brexit, which also helped in boosting the said index.

S&P 500 Quarterly Report

About 120 or 24% S&P 500 companies are set to release their quarterly outcome this week, which can test the all-time high. Companies including Boeing and Caterpillar, are anticipated to report Wednesday morning. Also, several companies are on deck for the week, like Chipotle Mexican Grill, McDonald’s, Intel, and Amazon. 

Chief Market Strategist at National Securities Art Hogan said that because of the potential for a mixture of things which drive them to new highs. He also added that due to the better microdata earnings, it results in better news on the macro hurdles that they are facing. 

Beating the Analysts Expectations

According to the FactSet data, more than 14% of the S&P 500 companies have conveyed through Friday. 81% of those companies posted revenues beating the expectations of the analysts. On the released reports on Tuesday, J.P. Morgan Chase sent the stocks to an all-time high. The Bank of America and Citigroup also got increases from their profits release. 

On Thursday, Netflix momentarily rallied around 7% and ended the session with a 2.5% increase. Morgan Stanley progressed 1.5% on profits while Coca-Cola scaled more than 1% on Friday after emancipating its quarterly figures. 

The companies started on a shallow bar in this earnings period. Forecasters surveyed by FactSet projected the earnings to fall by 4.6% in the third quarter. According to Chaikin Analytics chief market strategist Dan Russo, profits can be a positive stimulant to the degree that expectations are pretty low. He also stated that by lowering the bars, companies could jump over it. 

Investor’s Predicament

Because of the week’s information, investors have a harder time to absorb the outcome. Companies like Caterpillar, because of their exposure to markets overseas, are profoundly affected by the US-China trade battle. The same is true for Intel and Boeing. In the meantime, reports from Amazon, Chipotle, and McDonald’s will undergo heavy analyzation as stockholders will check for clues on how the customers are doing. 

According to Scott Wren, Wells Fargo Investment Institute’s senior global strategist said that the 2019 earnings growth was affected by the global economic slowdown and trade frictions. Also, the third-quarter income reporting period will likely certify that those rebuffs sustained to pour over into the last period’s results. 

Trade Talks Bring Good News

Because of the current trade talks, stockholders received good news as it appears that there is progress. On October 11, US President Donald Trump proclaimed that America had reached a very substantial stage one deal with China. Several reports last week stated that China is looking for more discussion before they agree on the first phase. However, according to Larry Kudlow, director of the National Economic Council, stated that it would need a lot of momentum to complete the deal.

According to Huntington Private Bank’s chief investment officer John Augustine, the statement around the trade is more inclined to the negative side. Also, Augustine added that there might be a better possibility than not signing the phase-one deal. 

There’s also a slight increase in the preliminary figures in October from September on consumer sentiments. On Friday, the final numbers for this month’s consumer sentiments. The Stevens Report founder, Tom Essaye, said that if the corporate incomes display signs of flexibility, particularly by the American consumers, then running to new highs is by not at all out of the questions.