Month: January 2019

Solid earnings growth pushed the market higher in the past week. The Dow Jones Industrial Average increased during early Wednesday trading after International Business Machines (IBM), United Technologies (UTX) and Proctor & Gamble (PG) delivered earnings reports.

Financials have outperformed thanks to strong earnings from Citigroup (C), Bank of America (BAC) and Goldman Sachs (GS).

United Technologies (UTX) beat estimates by a wide margin. Analysts were looking for a 6 percent drop in earnings and a 7 percent increase in sales. Instead, earnings rose 21 percent and revenue climbed 15 percent. Aside from UTX’s rally, the industrial sector has rallied as several railroad and trucking companies reported positive earnings.

Consumer staples entered positive territory due to P&G’s earnings report. Netflix (NFLX) and Facebook (FB) weighed on communication services. NFLX offered lower than expected guidance, while there is a possibility FB could receive a record fine from the FTC for privacy violations.

The U.S. Dollar Index has increased over the past week and emerging market currencies slumped. Nevertheless, iShares MSCI Emerging Markets (EEM) was still able to outpace the S&P 500.

SPDR S&P 500 (SPY) rallied since December 24 and the major indexes have recovered more than 50 percent of their losses since October. The Dow, Russell 2000 and Nasdaq have each shown a similar pattern.

Crude oil has surpassed its fourth-quarter trading range. If bullish trading continues, oil may soon exceed $60 per barrel.

Large banks delivered a mix of earnings reports this week. Goldman Sachs (GS) and Citigroup (C) saw their shares rise 14.47 and 11.34 percent. J.P. Morgan (JPM) gained 4.68 percent.  SPDR Financials (XLF) increased 6.12 percent and was the best performing sector this week.

Homebuilder confidence increased in January, as falling interest rates helped improve housing affordability. Employment stayed strong with only 213,000 initial unemployment claims this week, lower than the 220,000 forecast.

Industrial production increased 0.3 percent in December and capacity utilization hit 78.7 percent. Manufacturing output climbed 1.1 percent. The industrial production figure was the best since March of 2018 and the capacity utilization figure is the best since 2015.

The University of Michigan consumer sentiment survey slid to 90.70. They cited short-term issues such as financial market volatility and the government shutdown for the dip in sentiment.

Crude oil rose 4.75 percent this week. Natural gas popped 12.36 percent as a cold snap hit the Midwest and Northeast. SPDR Energy (XLE) climbed 2.95 percent for the week.

The U.S. Dollar Index rallied 0.9 percent versus the widely tracked currency basket. The strong dollar helped domestic shares outperform this week. The Dow Jones Industrial Average led the broad indexes with a gain of 2.96 percent. SPDR S&P 500 (SPY) climbed 2.86 percent, iShares MSCI Emerging Markets (EEM) 2.10 percent and iShares MSCI EAFE (EFA) 1.77 percent.

Aside from the major banks, there were earnings reports from heavyweights in the energy, transportation and communication services sectors. Schlumberger (SLB) climbed 8.12 percent on Friday after it met analyst expectations. Shares of JB Hunt (JBHT) gained 6.19 percent. Kansas City Southern (KSU) rallied 6.13 percent.

Financials outperformed on Monday after Citigroup (C) reported strong earnings. The firm generated $1.61 per share in the fourth quarter, beating estimates by 4 percent and prior-year earnings by 25 percent. Equity trading revenue increased in the fourth quarter, due to increased market volatility. Citigroup gained 3.95 percent on the day.

Producer price inflation will be released on Tuesday. Economists expect headline producer price inflation to match the headline CPI in December. Homebuilders’ confidence in January will be out on Wednesday along with the Federal Reserve’s Beige book, which summarizes economic activity. Forecasters see December industrial production rising 0.3 percent. The University of Michigan’s consumer sentiment survey is expected to fall slightly from 98.3 to 97.5.

Last week saw several speeches by Fed officials, including another panel with Fed Chair Powell and former chairs Bernanke and Yellen. This week, five officials will deliver six speeches. Since Fed Chair Powell sounded a more dovish tone in December, speculators are betting the Fed will pause its rate hike cycle in 2019.

Crude oil fell to $50.70 per barrel Monday, but cold winter weather in parts of the country sent natural gas higher by 16 percent. SPDR Energy (XLE) declined 0.24 percent on the day.

PG&E (PCG) announced it is preparing for bankruptcy, causing shares to fall more than 52 percent. The firm could incur charges of roughly $30 billion stemming from California wildfires in 2017 and 2018. Although other utilities companies aren’t impacted by the PG&E news, it cast a pall over the sector. SPDR Utilities (XLU) fell 2.26 percent on the day.

J.P. Morgan (JPM), Wells Fargo (WFC), Bank of America (BAC), Goldman Sachs (GS), Morgan Stanley (MS), PNC Financial Services (PNC), U.S. Bancorp (USB), Charles Schwab (SCHW), KeyCorp (KEY), American Express (AXP), BB&T Corp (BBT), Regions Financial (RF), State Street (STT) and Bank of New York Mellon (BK) are some of the many financial firms delivering earnings the rest of this week. Firms representing more than 50 percent of assets in SPDR Financial (XLF) will announce earnings.

Dow Jones Industrial Average component UnitedHealth Group (UNH) reports earnings on Tuesday.  Analysts are expecting $3.22 per share. UNH is 7.16 percent of SPDR Healthcare (XLV).

Netflix (NFLX) will report after market closes on Thursday. Analysts predict $0.25 per share in earnings. Netflix is 5.63 percent of SPDR Communication Services (XLC).

Oil service giant Schlumberger (SLB) delivers earnings on Friday. The consensus earnings forecast calls for $0.37 per share. It is 16.56 percent of iShares U.S. Oil Equipment & Services (IEZ).

United Continental (UAL), Kinder Morgan (KMI), Alcoa (AA), Taiwan Semiconductor (TSM), Fastenal (FAST), PPG Industries (PPG) are among the other firms that will announce earnings.