The markets are closed Monday, and likely on Tuesday as well,
due to the approaching Hurricane Sandy. The decision to close all
market activity on Monday reversed the earlier partial shutdown
call that would have kept open electronic trading activities even
as it closed down all trading floors. This is the first
unscheduled market shutdown since September 2001.
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All scheduled economic releases on this week's calendar are
expected to come as originally planned, though some of the
earnings announcements have been delayed. Most of the major
economic reports are coming out later this week, with the October
non-farm payroll report coming out Friday morning.
The consensus expectation is for the jobs report to show gains of
120K this month, with a modest uptick in the unemployment report.
More so than market impact, this jobs report will likely have far
more resonance in the political field given the charged electoral
The ADP report on Thursday will give us a preview of the
government jobs report. We will also get the October
manufacturing ISM survey on Thursday.
On the earnings front, this week's busy reporting schedule is
unlikely to change the overall weak tone of the reporting season
thus far. Including results this morning from
), we have third quarter results from 273 companies in the
S&P 500 or 54.6% of the index's total members.
Total earnings for these companies are down 2.4% from the same
period last year and only 61.5% of the companies are beating
earnings expectations. Total revenues are down 2.1%, but only
30.7% of the companies are able to beat revenue expectations.
Combining the 273 companies whose results are known already with
the 227 reports still to come gives us a composite growth rate
for the third quarter of a 1.1% decline (the composite revenue
growth rate is 2.4%).
The predominantly negative tone of company guidance has started
showing up in estimate revisions, but overall estimates for the
fourth quarter and beyond still remain elevated at this stage.
Total earnings are expected to grow 6.1% in the fourth quarter
and in excess of 11% of in 2013.
These growth expectations have come down from a few months back,
but they still have more room to fall. The market weakness of
recent days is largely a reflection of this uncertain and
downbeat corporate earnings picture.