Month: October 2017

Market Perspective for October 16, 2017

The Dow Jones Industrial Average pushed towards 23,000 on Monday. Technology and financials were two of the best performers on the day.

Netflix (NFLX) reported better-than-expected earnings after the bell on Monday, citing strong international subscriber growth in the third quarter.

Johnson & Johnson (JNJ), UnitedHealth Group (UNH), International Business Machines (IBM), Goldman Sachs (GS), Morgan Stanley (MS), CSX Corp (CSX) and Harley-Davidson (HOG) will report on Tuesday. IBM, Goldman and Harley are all forecast to report year-on-year declines. Analysts see growth of 7 and 18 percent at JNJ and UNH.

Abbott Labs (ABT), U.S. Bancorp (USB), American Express (AXP) and eBay (EBAY) will headline Wednesday’s reports. Analysts expect double-digit growth at Abbot and American Express.

Verizon (VZ), Philip Morris International (PM), PayPal (PYPL), Intuitive Surgical (ISRG), Danaher (DHR), Bank of New York (BK), Blackstone Group (BX), BB&T Corporation (BBT), Travelers (TRV) and KeyCorp (KEY) will report on Thursday.

General Electric (GE) will report on Friday. Some analysts have cut estimates after the departure of several top executives, but the consensus still calls for better than 50 percent earnings growth. Analysts are looking for 50 cents per share, up from 32 cents a year ago. GE division Baker Hughes (BHGE) will also report, along with Proctor & Gamble (PG), Honeywell (HON), Schlumberger (SLB), SunTrust Banks (STI), Synchrony Financials (SYF), Citizens Financial (CFG) and Kansas City Southern (KSU).

Economic data will be relatively light this week. The key reports will be in the housing sector. The October homebuilders’ index, housing starts, building permits and existing home sales for September will all be released.

Chinese producer price inflation spiked in September. It rose 6.9 percent over the past 12 months, and 1 percent in September alone, a double-digit annualized rate. The People’s Bank of China head upped his forecast of economic growth to 7 percent for the second half of 2017. Economists are forecasting 6.8 percent for the third quarter. Credit growth spiked in September as well, faster than expected. Copper prices rallied on Monday as a result. Later in the week, China will release real estate and fixed-asset investment for September.

Eurozone inflation for September will be out on Tuesday. This will be the last major data release ahead of its October 26 meeting. While the ECB was expected to release plans to taper quantitative easing next week, there are rumors it could shift the decision to December.

Last week’s Fed minutes caused a slight dip in rate hike expectations, but speculators still put the odds of a December rate hike at 88 percent coming into this week.

Crude oil and copper bounced on Monday, but energy equities are in a consolidation phase. SPDR Materials (XLB) lost ground despite the bump from copper miners. Healthcare stocks were mixed as investors assess the impact of President Trump’s executive order allowing for interstate competition. Semiconductors pulled technology higher on the day.

 

Market Perspective for October 13, 2017

Equities hit new all-time highs this week following strong economic data. Technology, industrials and materials outperformed the broader market. The Dow Jones Industrial Average led index performance with an increase of 0.43 percent.

The Job Openings and Labor Turnover Survey (JOLTS) reflected 6.1 million job openings at the end of August. The quit rate was 2.1 percent, consistent with 2017’s previous reports. Initial claims for unemployment fell to 243,000 last week, well below expectations of 258,000.

Strong retail sales matched solid employment data. Sales increased 1.6 percent in September. Auto sales rose 3.6 percent, and building materials stores saw growth of 2.1 percent as hurricane recovery began. Stripping out these items and gasoline sales (which fluctuate with oil prices) showed core retail sales up 0.4 percent.

Consumer confidence strengthened in early October. The University of Michigan’s confidence survey hit 101.1, its highest reading since 2004. Sub-components indicated strong confidence in financial markets and income optimism.

The Federal Reserve’s minutes of the September FOMC meeting showed support for a December hike, but some officials were concerned about inflation being below the Fed’s 2 percent target. Producer prices were consistent with the Fed’s mandate in September, rising 0.4 percent as energy prices rebounded. Consumer prices also increased sharply, up 0.5 percent, but the core number only rose 0.1 percent. The odds of a December rate finished the week at 83 percent.

Healthcare providers fell on Friday after President Trump signed an executive order ending bailouts for insurers. Insurers will also be able to sell insurance across state lines and market short-term plans that last longer than three-months. iShares U.S. Health Providers (IHF) fell 0.96 percent on the day.

Earnings season started well. Delta Air Lines (DAL) beat expectations by 4 cents. Shares gained 3.7 percent on the week. Blackrock (BLK), the firm behind the iShares line of ETFs, rose 2.6 percent after it beat earnings estimates by 6 percent. Assets under management grew 17 percent versus a year-ago.

J.P. Morgan (JPM) beat estimates by 7 percent, but low volatility in the markets dragged trading revenue lower. Citigroup beat estimates by 8 percent, but investors worried about higher credit costs. Bank of America (BAC) and Wells Fargo (WFC) beat earnings as well, but Wells slipped on higher-than-expected litigation costs unrelated to its fake accounts scandal. The financial sector consolidated following its 10 percent rally in the prior month. SPDR Financials (XLF) declined 1.1 percent on the week.

ETF & Mutual Fund Watchlist for October 11, 2017

The Dow Jones Industrial Average and Nasdaq rallied to new highs over the past week, while the S&P 500 Index and Russell 2000 consolidated gains. 1011spy SPDR Technology (XLK) achieved a new all-time high this week. The semiconductor subsector has been strong since early 2016. Internet and cloud computing stocks have also performed well. 1011xlk 1011soxx 1011fdn 1011socl 1011skyy 1011igv 1011ign Online retail is still in a consolidation pattern versus brick-and-mortar sellers. SPDR S&P Retail’s (XRT) relative strength, however, suggests online retail may fare worse in the near-term. 1011ibuyxrt
1011ibuy
1011xrt
1011amzn

September lifted SPDR Financials (XLF) more than 10 percent. Banks, including smaller regional and community banks were the best performing subsector, all of which pushed on to new 52-week highs. Later this week, several mega banks and a few regional banks will deliver earnings reports. The most important are J.P. Morgan (JPM), Citigroup (C), Bank of America (BAC) and Wells Fargo (WFC). These four banks combine for 32.6 percent of XLF’s assets and dominate nearly all financial funds.
1011xlf
1011kre
1011qaba

The industrial sector has performed very well in 2017. It has gained 17 percent, while its former top component General Electric (GE) is down about 25 percent. Shares of GE fell 6 percent this week after several top executives left the firm. Chairman Jeff Immelt retired three months early with two vice chairs and CFO Jeffrey Bornstein. On Wednesday, J.P. Morgan (JPM) said a dividend cut is growing “increasingly likely” and it also reduced its price target to $20. Due to the slide in shares, GE is no longer the largest stock in XLI. Boeing (BA) now tops it with 6.44 percent of assets to GE’s 6.37 percent. As for XLI, it trades near its all-time high due to strength in aerospace and defense stocks.
1011gexli
1011ge
1011xli
1011ita

Industrial commodities moved higher this week, but copper, coal and steel producers all remain in a short-term consolidation pattern. The long-term charts of these stocks show all three formed inverse head-and-shoulders patterns. If these complete, gains of 60 percent or more for these sectors will be possible. SPDR Materials (XLB) formed a similar pattern between 2014 and late 2016 with a target of $60 per share. SLX needs to clear $46, KOL $15.50, and COPX around $27.50 for the pattern to complete. Until then, those levels will serve as resistance.
1011dbb
1011copx
1011slx
1011kol
1011xlb

The U.S. dollar rally consolidated over the past week. The greenback was stronger against emerging market currencies following diplomatic challenges with Turkey. UUP USDU Emerging markets started underperforming developed markets in late August, just before the U.S. dollar rally began. The relative-price chart of iShares MSCI Emerging Markets (EEM) to iShares MSCI EAFE (EFA) mirrors charts of COPX, SLX and KOL because many EM countries are commodities exporters. EEMEFA Housing, automobiles and construction continue to benefit from hurricane recovery efforts. PowerShares Dynamic Building & Construction (PKB), iShares U.S. Home Construction (ITB) and First Trust Global Auto (CARZ) all hit new 52-week highs in the past week. September auto sales crushed expectations with an annualized sales pace of 18.6 million, more than 1 million above estimates and 2.5 million above August’s pace.
1011pkb
1011itb
1011carz

The Investor Guide to Fidelity Funds for October 2017

The Investor Guide to Fidelity Funds for October 2017 is Now Available! Links to the October Data Files have been posted below. Market Perspective: Banks & Small Caps Rally Stocks […]

To access this post, you must purchase Investor Guide to Fidelity Funds – 1 Year, Online Only - Emailed Directly to Your Inbox, Investor Guide to Fidelity Funds – 2 Year, Online Only - Emailed Directly to Your Inbox, Investor Guide to Fidelity Funds – 3 Year, Online Only - Emailed Directly to Your Inbox, Investor Guide to Fidelity Funds – 1 Year, Print - Delivered Each Month via USPS, Investor Guide to Fidelity Funds – 2 Year, Print - Delivered Each Month via USPS or Investor Guide to Fidelity Funds – 3 Year, Print - Delivered Each Month via USPS.