Market Perspective for April 9, 2018

Stocks rallied on Monday as trade war fears ebbed. President Trump expects China will lower its trade barriers. President Xi will address the Boao Forum on Tuesday (this evening in the U.S.), his first address at the economic summit since consolidating political power. Economists on both sides of the Pacific hope he will announce a major new era of economic reform.

The Nasdaq gained 0.51 percent on the day to lead the major indexes.  SPDR Technology (XLK) increased 0.78 percent, SPDR Healthcare 0.99 percent, SPDR S&P Biotech (XBI) 2.73 percent.

The National Federation of Independent Business will release the March small business confidence survey on Tuesday. The prior reading was 107.6, near the all-time high set in the early 1980s. Producer price inflation and wholesale inventories will be out the same day. Wednesday will bring consumer price inflation and the minutes from the last Federal Open Market Committee meeting. The week will close with import prices, the Job Openings and Labor Turnover Survey (JOLTS), and the flash April reading from the University of Michigan’s consumer sentiment survey.

China will report March inflation, lending, and trade data this week. The trade deficit with China has risen as consumption has increased with economic growth. Additionally, importers and exporters may be rushing orders ahead of potential tariffs later this year.

The 10- and 30-year Treasury yields moved higher on Monday. Both are also consolidating after hitting new multi-year highs in February. Crude oil rebounded above $63 a barrel to open the week.

Earnings season officially kicks off this week. Citigroup (C), Wells Fargo (WFC) and J.P. Morgan (JPM) will report earnings on Friday, alongside major regional bank PNC Financial Services (PNC). Analysts have forecast earnings growth of 19.1, 7, 38 and 23 percent at these firms, respectively. Rising interest rates are boosting bank earnings and financial market volatility should lift trading revenue.  The consensus estimate for financial sector earnings growth is 19.8 percent.

Bed, Bath & Beyond (BBBY), BlackRock (BLK) and Delta Air Lines (DAL) will also report this week.

 

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