Market Perspective for October 7, 2019

It will be a significant week for the financial markets with the upcoming U.S. and China trade meeting. China said it favored a smaller deal focused on issues of mutual agreement. President Trump has previously stated he wants a substantial deal. Investors can expect elevated volatility. Even today, the S&P 500 Index jumped 10 points midday, or 0.3 percent, after China said it would seek a limited agreement.

The Russell 2000 Index was the best performing index on Monday, slipping 0.14 percent.

Federal Reserve meeting minutes will be released this week, along with several public speeches by Chairman Powell.

The National Federation of Independent Business will report small business confidence on Tuesday. Producer prices for September are also out tomorrow. Economists expect prices to have increased 0.1 percent last month.

The Job Openings and Labor Turnover Survey for August is out on Wednesday. It showed 7.2 million openings in July, still well higher than the number of unemployed Americans.

Consumer price inflation will be released on Thursday. Economists expect a 0.1 percent increase, but they forecast a decline in core CPI from August’s 0.3 percent down to 0.2 percent.

On Friday, the University of Michigan will release its advance survey of consumer sentiment in October.

Crude oil traded as high as $54 per barrel before settling at $52.75, down 6 cents on the day. Energy was the worst performing sector, with SPDR Energy (XLE) losing 0.89 percent.

The U.S. Dollar Index climbed 0.2 percent on Monday as trade news drove the greenback higher. Currency traders like the U.S. position in the trade war. In addition to the dollar index, they’ve been bidding up the Canadian dollar versus the Australian dollar. The two countries have similar economies with large resource export sectors and possible housing bubbles. Australia is heavily influenced by China’s market, while the U.S. influences Canada. The Canadian dollar’s relative strength signals traders think the U.S. economy is in better shape than China. The Chinese yuan fell to 7.13 per U.S. dollar on the day, down from 7.11 on Friday.

A few companies will report earnings this week, including Domino’s Pizza (DPZ), Helen of Troy (HELE), Delta Air Lines (DAL) and Fastenal (FAST). Analysts expect $2.07 per share in earnings for Domino’s, up from $1.95 a year earlier, along with revenues of $825 million. They see Delta delivering $2.27 per share in earnings, up more than 20 percent from over same quarter in 2018.

 

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