Markets Poised To Continue Its Postive Trend
Stocks appear to have shaken off last week's blues, with the weekend developments out of Paris and even the impending Fed lift-off pushing the major indexes higher. A couple of positive earnings reports and an in-line inflation reading are adding to this morning's favorable sentiment.
The October CPI reading came in-line with estimates this morning, likely indicating that it will have no implications for the Fed lift-off timeline next month. No major surprise are expected from the industrial production and homebuilder sentiment surveys coming out a little later today, meaning that current market expectations of the first rate hike in about a month's time remains on track. Minutes of the Fed's last meeting coming out Wednesday afternoon will likely give us the clearest signal yet of the committee's thinking on this key subject.
On the earnings front, the focus lately has been on the retail sector, with a number of department stores coming short of estimates. This morning's reports from Wal-Mart ( WMT ) and Home Depot ( HD ) came in better than expected, though the Wal-Mart outperformance appears largely to be a function of lowered expectations following the retailer's preannouncement last month. The stock is expected to show some momentum in today's session, but it has lost more than a third of its value in the year-to-date period. The Home Depot strength is for real and reflects the home-improvement retailer's leverage to the strengthening fundamentals of the U.S. housing market.
Homebuilder confidence remains at record levels, which is not only showing up in housing starts data, but also generating stronger gains from the contractor end-market for Home Depot. The stock has been a strong performer this year, up in excess of +14% in the year-to-date period.
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