Month: November 2016

Markets will look to build on last week’s gains over the next few days as investors anticipate policy announcements from President-elect Trump and his transition team. Volatility may increase as traders rotate into companies expected to benefit under new leadership. Federal Reserve Chair Janet Yellen will testify before a joint Congressional committee on Thursday and could confirm recent market optimism. The odds of a December rate hike reached 81 percent last week.

October retail sales data will be released on Tuesday, with analysts forecasting a 0.6-percent increase. The New York Fed’s latest Empire State Manufacturing Survey, also due out on Tuesday, is expected to show a slight rise in activity. Europe’s third-quarter gross domestic product (GDP) anticipates a 1.3-percent year-over-year increase when data is released tomorrow.

The latest weekly Mortgage Purchase Application Index and the Industrial Production and Capacity Utilization figures for October, which are expected to rise slightly, are due out on Wednesday. Weekly oil inventory is forecast to increase more than a million barrels. The domestic producer price index (PPI) and consumer price index (CPI) are scheduled for release on Wednesday and Thursday respectively. The Bureau of Labor Statistics anticipates a slight rise in each report, which reflects only a moderate increase in inflation.

In addition to CPI data, weekly unemployment claims, housing starts and the Philly Fed manufacturing survey will be available on Thursday. While unemployment claims are expected to remain at multi-decade lows, housing starts are forecast to rise month-over-month. Economists anticipate a slight decrease in the manufacturing survey.

In addition to tech companies Cisco Systems (CSCO) and Salesforce.com (CRM), several major retailers will also release earnings reports this week. Cisco is expected to show continued slow, steady growth in sales and revenues. Several analysts have recently raised price targets on Salesforce. Home Depot (HD), Lowe’s (LOW) and major discount retailers Target (TGT) and Wal-Mart (WMT) will report earnings this week. While Home Depot is expected to surprise the market to the upside, Lowe’s is trying to shake off a recent string of analysts’ downgrades. Target’s sales figures have declined for five consecutive quarters, while Wal-Mart is expected to handily beat analysts’ forecasts. Best Buy (BBY) hopes to build on last quarter’s success when it reports Thursday.

Markets enthusiastically traded higher on the week as investors welcomed the conclusion of the presidential election. A significant futures market sell-off on Tuesday quickly reversed once the results were confirmed. The Dow Jones industrial average climbed to a new record, while the S&P 500 Index was within a percentage point of its all-time high. The tech-heavy Nasdaq gained more than 3 percent, but turned lower as Internet shares fell on Thursday. The Russell 2000 Index fell steadily in October, but gains this week reversed all those losses.

Financials, biotechnology, energy and health care led the rally. SPDR S&P Regional Bank (KRE) advanced more than 10 percent, JPMorgan (JPM) climbed over 9 percent and SPDR S&P Bank (KBE) reached its highest level in more than eight years in the two days after the election.  Pharmaceuticals also enjoyed a rally following the election. Pfizer (PFE) and Merck (MRK) both gained 7 percent on Wednesday, while SPDR Biotech (XBI) climbed more than 14 percent. The SPDR Select Sector Health Care ETF (XLV) was up almost 8 percent and the iShares Nasdaq Biotechnology ETF (IBB) rose 15 percent. The 30-year Treasury index fell, and gold declined as the U.S. dollar index rose 2 percent. The MSCI Emerging Markets ETF (EEM) lowered by approximately 2 percent in response to the election, while the iShares MSCI EAFE (EFA) ETF was up slightly more than 1 percent.

Chinese trade balance figures missed both import and export forecasts with a $49 billion surplus, the lowest in six months. The country’s consumer price index (CPI) rose 2.1 percent due to a 0.2 percent increase.  Tuesday’s Jobs Opening and Labor Turnover Survey (JOLTS) report indicated 5.49 million openings, slightly below estimates. Layoffs, however, were at a record low.  First time unemployment claims were also better than expected at 254,000, confirming sustained strength in the labor market.

Weekly crude inventory increased and West Texas Intermediate Crude remained relatively unchanged near $44 per barrel. Energy Select Sector SPDR ETF (XLE) shares rose more than 4 percent with overall market strength. Although December rate hike expectations fell slightly, St. Louis Fed President James Bullard indicated Thursday that the Fed would increase the discount rate.

Priceline (PCLN) delivered better-than-expected earnings and revenues on Monday, sending shares higher by 8 percent. Shake Shack (SHAK) also exceeded earnings estimates, reported better same-store sales and reiterated positive full-year guidance. SHAK stock rose 11 percent following Wednesday’s report. Disney (DIS) shares increased, despite earnings and overall revenues that missed target estimates. The company’s ESPN sports division continues to underperform.

The stock price of embattled Valeant Pharmaceuticals (VRX) fell more than 30 percent, but pared half of that loss as the week progressed. Mylan (MYL) overcame its recent pricing scandals with acquisitions and new product launches. MYL shares rose 10 percent following positive earnings and revenues. Although sales and earnings missed forecast estimates, shares of Macy’s (M) rose 10 percent when the company reaffirmed its future sales growth targets. Kohl’s (KSS) shares jumped 8 percent as the company handily beat earnings and revenue estimates.

The market rebounded from a nine-day decline on Monday following the FBI’s reassurance that Hillary Clinton’s email scandal will not lead to criminal charges, though another swing is likely in the wake of tomorrow’s election.  All major indexes recovered more than two percent before Monday’s closing bell, led by the Dow Jones Industrial Average’s 371-point advance. The Dow finished the day up 2.08 percent with its largest one-day gain since August 2015. The S&P 500 climbed 2.22 percent, the Nasdaq 2.37 percent and the Russell 2000 advanced 2.50 percent.

The U.S. presidential election will overshadow the few data sets and earnings reports scheduled for this week. The inflation and employment targets set by the Federal Reserve are on track for a December interest rate hike and the economy should be able to withstand any short-term volatility following the election. British lawmakers are expected to debate the implications of the British court’s earlier decision challenging the Brexit vote and may affect overseas trading as well as the strength of the British pound, the Euro and the U.S. dollar.

Chinese trade balance figures will be released on Tuesday. Exports are expected to fall 6 percent, improving from last month’s 10 percent. China’s consumer price index (CPI) is forecast to rise 2.1 percent. The Jobs Opening and Labor Turnover Survey (JOLTS) for September, also due out on Tuesday, is forecast to show a slight decrease in job openings. Inventories are expected to rise 0.2 percent on Wednesday’s Monthly Wholesale Trade report. Weekly crude inventory is expected to increase and further suppress the price of a barrel of West Texas Intermediate Crude. Initial unemployment claims are expected to fall slightly from last week. The latest preliminary University of Michigan Consumer Sentiment Survey, which is forecast to rise slightly, will be released Friday.

Several large retailers, pharmaceutical firms, Shake Shack (SHAK) and the Walt Disney Co. (DIS) will report earnings this week. Priceline shares rose sharply through Monday after-hours trading following earnings and revenues that handily beat estimates. Shake Shack’s profit margins and growth estimates will be of interest to investors when SHAK reports after trading on Wednesday. Disney is scheduled to report Thursday. Valeant Pharmaceuticals (VRX), Mylan (MYL) and AstraZeneca (AZN) will also report this week and may comment on the impact of proposed price control regulations.  Macy’s (M), J.C. Penny (JCP) and Kohl’s (KSS) will report earnings this week as brick-and-mortar retailers head into the holiday shopping season.