Bulk Of Earnings Season To Wrap Up This Week

MarketInsite Stocks Graphic

Monday, August 6, 2018, 10:42 AM, EST

  • NASDAQ Composite +0.12% Dow -0.20% S&P 500 +0.06% Russell 2000 +0.29%
  • NASDAQ Advancers: 1345 Decliners: 806
  • Today’s Volume (First Hour) -5.6%

The markets are a little higher after a flattish open to a week that will see the bulk of earnings season wrap up with 45 members of the S&P 500 reporting. Theeconomic calendaris light with inflation measures (PPI and CPI) due midweek. As with the major indices, the sectors are little changed with Financials (+0.3%) leading and Materials (-0.3%) trailing. The dollar index is 0.3% higher, gold is 0.3% lower, and crude oil is up 1.2% after declining for the past five weeks.

  • JP Morgan Chief Jamie Dimon says prepare for rates as high as 5% on the 10-year. “I think rates should be 4% today…you better be prepared to deal with rates 5% or higher,” Dimon said at a Gala over the weekend. He’s not alone in expecting higher rates, the CTFC reported Friday that investors have record short positions in the 5 and 10-yr treasuries. For now however, the 3% level remains a strong resistance point that as recently as last week saw yields unable to sustain a move above. As for equities, Dimon says the current bull market has another “2 or 3 more years” to go.
  • Recall the ‘peak earnings’ theory that held Q1 was the high water mark? Not so fast, Bloomberg News put out a piece Friday night highlighting earnings expectations are heading higher with estimates for S&P 500 earnings in 2019 rising by 7.6%, the most since 2012. For SPX companies that have reported, Factset data indicates 80% have exceeded earnings estimates and 74% beat on sales, and if that holds through this week those percentages are the best since Factset began tracking these statistics about ten years ago.
  • Goldman Sachs put out a report late Friday projecting that corporate share repurchase authorizations are on pace to hit $1 trillion this year. If that target is reached it represents a 46% over last year. The firm notes that typically 85% of authorized buybacks get executed and at that level, executed buybacks should surpass the 2007 record.

Technical Take:

After a sharp uptrend from April through June, the US dollar index (DXY) has spent nearly two months consolidating in what is developing into a bullish ascending triangle pattern of higher lows which is converging towards horizontal resistance at the 95.15 – 95.55 range. This resistance previously marked a pivot high in Q4’17. An upside breakout above the current range carries a price projection towards the $97.50 area and would act as a headwind well for certain assets such as commodities, emerging markets, and large US multi-national corporations.

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Nasdaq's Market Intelligence Desk (MID) Team includes:

Charles Brown is Associate Vice President on The Market Intelligence Desk with over 20 years of equity capital markets experience. Charlie has extensive knowledge of equity trading on both floor and screen based marketplaces. Charlie assists with the management of The Market Intelligence Desk and works with Nasdaq listed companies providing them with insightful objective trading analysis.

Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.

Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.

Brian Joyce, CMT is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Before joining Nasdaq Brian spent 16 years as an institutional trader executing equity and options orders for both the buy side and sell side. He also provided trading ideas and wrote technical analysis commentary for an institutional research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Transportation companies, among others, understand the trading in their stock. Brian is a Chartered Market Technician (CMT).

Michael Sokoll, CFA is a Senior Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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