Market Perspective for January 30, 2017

Bullish sentiment and positive earnings reports propelled the major averages to record highs last week. Earnings could drive the market again this week, but three central bank meetings and economic reports will also impact trading.

The Bank of Japan, U.S. Federal Reserve and Bank of England are all expected to leave interest rates unchanged this week. At its last meeting, the Fed signaled it might hike three times this year, but investors are growing skeptical following last week’s weaker-than-expected GDP report.

The Bureau of Economic Analysis reports personal income increased 0.3 percent in December, up from 0.1 percent in November. Consumer spending rose 0.5 percent. Core personal consumption expenditures (PCE) inflation was 0.1 percent. Year-over-year, core PCE was 1.7 percent. Pending home sales figures from December, the Case-Schiller Home Price Index for November, and January’s consumer confidence data will be out later in the week.

In addition to the Fed meeting, the Markit and ISM Purchasing Managers’ Indexes, auto sales for January, construction spending in December, weekly mortgage purchase applications index and oil inventory will all be released on Wednesday. Last week, the flash numbers for the U.S., U.K., Europe and Japan were all positive. Economists forecast a slight decline in light vehicle sales, mortgage applications and crude inventory levels.

The monthly jobs report for January will be available on Friday. Analysts expect the economy to have generated 175,000 new jobs, but the headline unemployment rate is forecast to remain unchanged at 4.7 percent. The ISM service sector PMI will also be out on Friday.

One-third of the S&P 500 Index has reported earnings thus far, and this week will see another wave of blue chip reports. Thanks to earnings beats in the financial and technology sectors, earnings growth is up to 4.2 percent from the initial 3.1 percent estimate.

Apple and Exxon will be among the more prominent firms reporting this week.

Apple (AAPL), Exxon Mobil (XOM), Pfizer (PFE), United Parcel Service (UPS), Eli Lilly (LLY) and MasterCard (MA) will report on Tuesday. These companies have a combined market capitalization of roughly $1.4 trillion.

Facebook (FB), Altria Group (MO), Johnson Controls (JCI), Met Life (MET) and NXP Semiconductors (NXPI) are scheduled to report on Wednesday.

Thursday is another big day with Amazon (AMZN), Merck (MRK), Visa (V), Royal Dutch Shell (RDS.A), Philip Morris International (PM), Amgen (AMGN), Novo Nordisk (NVO), ConocoPhillips (COP) and AstraZeneca (AZN) on tap.

Honda (HMC), Phillips 66 (PSX), Hershey (HSY) and Clorox (CLX) will report on Friday.

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