Markets are poised to resume the post-election rally and should continue higher this week in response to positive earnings, a strong labor market, and general optimism. Alcoa (AA) will kick off 2017 earnings reports tomorrow, and several major financial institutions are scheduled to report on Friday. The current bullish sentiment could cause stocks to break out of the current trading range and again reach new all-time highs.
On Tuesday, the Chinese Consumer Price Index (CPI) is forecast to show 2.4 percent year-over-year growth while the country’s Producer Price Index (PPI) is expected to rise by 4.8 percent. The Job Openings and Labor Turnover Survey (JOLTS) for November is scheduled to reflect a slight decline. The weekly crude oil inventory data and mortgage purchase application index figures are due out on Wednesday. After last week’s unexpected drop, oil stockpiles are forecast to remain steady. Mortgage applications are expected to rise slightly.
Thursday’s weekly unemployment claims figure is projected to increase slightly from the previous report. The U.S. Producer Price Index is expected to rise 0.3 percent and the domestic retail sales figures for December are expected to increase 0.7 percent. Both reports will be available on Friday.
Financial stocks have made solid gains since the year-end rally and interest rate hike. This sector may be poised for significantly higher prices. Financial earnings and revenue numbers could set the overall tone for the rest of the reporting season. Bank of America, JPMorgan Chase and Wells Fargo are all scheduled to report before the opening bell on Friday.
One of the best-positioned large banks, Bank of America (BAC) is forecast to report earnings and revenues well above the same period last year. While analysts anticipate JPMorgan Chase (JPM) to exceed earnings expectations, they are calling for revenues in line with those recorded for the same period a year ago. Recovering from 2016’s fraudulent account scandal, Well Fargo (WFC) is also positioned to benefit from higher interest rates and the proposed changes in banking regulations. The company is expected to report significantly higher year-over-year earnings and revenues.