Market Perspective for October 14, 2019

Equities traded sideways on Monday. Investors digested last week’s trade news and the Federal Reserve’s balance sheet expansion plans. The S&P 500 Index fell 0.14 percent on the day.

Financial stocks were solid on the day as traders bet on a strong earnings season starting tomorrow. SPDR Financial (XLF) gained 0.14 percent. Materials were the weakest sector, with SPDR Materials (XLB) falling 0.71 percent.

September retail sales will be out on Wednesday. Economists forecast an increase of 0.3 percent.

The homebuilders confidence index for October is out this week, along with housing starts and building permits for September. iShares U.S. Home Construction (ITB) has rallied 12.1 percent over the past two months, buoyed by lower interest rates, low unemployment, rising wages and positive surprises in housing data.

Earnings will dominate this week as reporting season hits full swing. On Tuesday, mega banks JPMorgan (JPM), Wells Fargo (WFC), Citigroup (C) along with Goldman Sachs (GS) and Blackrock (BLK) will report before the bell. Healthcare giants Johnson & Johnson (JNJ) and UnitedHealth Group (UNH) will deliver results as well. Communication services bellwether Netflix (NFLX) will report after the bell.

On Wednesday, Bank of America (BAC), PNC Financial Services (PNC), U.S. Bancorp (USB) and Progressive (PGR) continue the early wave of major financial reports. International Business Machines (IBM), Alcoa (AA) and Abbott Laboratories (ABT) and Steel Dynamics (STLD) also announce.

Thursday brings major transports component Union Pacific (UNP), Morgan Stanley (MS), Phillip Morris International (PM), Honeywell (HON), Intuitive Surgical (ISRG), Danaher (DHR) and homebuilder NVR Inc. (NVR). Regional banks such as BB&T (BBT), KeyCorp (KEY) and SunTrust Banks (STI) are also in the mix.

This week’s reports end with Coca-Cola (KO), the largest oil services firm Schlumberger (SLB), American Express (AXP), transports component Kansas City Southern (KSU), plus more financials such as Synchrony (SYF), Citizens Financial Group (CFG) and State Street (STT).

The U.S. Dollar Index rebounded in Monday’s light trading, rising 0.30 percent. Crude oil fell a little more than $1 per barrel. iShares MSCI Emerging Markets (EEM) slipped 0.43 percent, iShares MSCI EAFE (EFA) 0.41 percent. The 10-year yield slipped to 2.20 percent.

 

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