Market Perspective for January 14, 2019

Financials outperformed on Monday after Citigroup (C) reported strong earnings. The firm generated $1.61 per share in the fourth quarter, beating estimates by 4 percent and prior-year earnings by 25 percent. Equity trading revenue increased in the fourth quarter, due to increased market volatility. Citigroup gained 3.95 percent on the day.

Producer price inflation will be released on Tuesday. Economists expect headline producer price inflation to match the headline CPI in December. Homebuilders’ confidence in January will be out on Wednesday along with the Federal Reserve’s Beige book, which summarizes economic activity. Forecasters see December industrial production rising 0.3 percent. The University of Michigan’s consumer sentiment survey is expected to fall slightly from 98.3 to 97.5.

Last week saw several speeches by Fed officials, including another panel with Fed Chair Powell and former chairs Bernanke and Yellen. This week, five officials will deliver six speeches. Since Fed Chair Powell sounded a more dovish tone in December, speculators are betting the Fed will pause its rate hike cycle in 2019.

Crude oil fell to $50.70 per barrel Monday, but cold winter weather in parts of the country sent natural gas higher by 16 percent. SPDR Energy (XLE) declined 0.24 percent on the day.

PG&E (PCG) announced it is preparing for bankruptcy, causing shares to fall more than 52 percent. The firm could incur charges of roughly $30 billion stemming from California wildfires in 2017 and 2018. Although other utilities companies aren’t impacted by the PG&E news, it cast a pall over the sector. SPDR Utilities (XLU) fell 2.26 percent on the day.

J.P. Morgan (JPM), Wells Fargo (WFC), Bank of America (BAC), Goldman Sachs (GS), Morgan Stanley (MS), PNC Financial Services (PNC), U.S. Bancorp (USB), Charles Schwab (SCHW), KeyCorp (KEY), American Express (AXP), BB&T Corp (BBT), Regions Financial (RF), State Street (STT) and Bank of New York Mellon (BK) are some of the many financial firms delivering earnings the rest of this week. Firms representing more than 50 percent of assets in SPDR Financial (XLF) will announce earnings.

Dow Jones Industrial Average component UnitedHealth Group (UNH) reports earnings on Tuesday.  Analysts are expecting $3.22 per share. UNH is 7.16 percent of SPDR Healthcare (XLV).

Netflix (NFLX) will report after market closes on Thursday. Analysts predict $0.25 per share in earnings. Netflix is 5.63 percent of SPDR Communication Services (XLC).

Oil service giant Schlumberger (SLB) delivers earnings on Friday. The consensus earnings forecast calls for $0.37 per share. It is 16.56 percent of iShares U.S. Oil Equipment & Services (IEZ).

United Continental (UAL), Kinder Morgan (KMI), Alcoa (AA), Taiwan Semiconductor (TSM), Fastenal (FAST), PPG Industries (PPG) are among the other firms that will announce earnings.

 

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