Market Perspective for May 1, 2017

The S&P 500 and Dow are both less than 1 percent away from setting new all-time highs, while the Nasdaq set a record for intraday and closing highs. The blended earnings growth rate hit 12.5 percent last week after a string of strong technology and industrial reports.

Apple (AAPL) will report earnings on Tuesday. The consensus forecast calls for earnings of $2.01. Pfizer (PFE), Merck (MRK), Gilead Sciences (GILD), Altria (MO), Mastercard (MA), B.P. (BP), Charter Communications (CHTR), CVS Health (CVS), Mondelez (MDLZ) and ConocoPhillips (COP) will also release reports on Tuesday.

Facebook (FB) will report on Wednesday. Analysts are looking for 54 percent earnings growth to $0.88 per share in the first quarter. Kraft Heinz (KHC), Novo Nordisk (NVO), Reynolds American (RAI), Time Warner (TWX), Tesla (TSLA) and Southern Company (SO) will also report.

Earnings will slow down later in the week. HSBC Holdings (HSBC), Ambev (ABEV), Occidenta Petroleum (OXY) and Moody’s (MCO) will report on Thursday and Friday.

The core Personal consumption expenditures price index (core PCE) fell 0.1 percent in March, while headline PCE declined 0.2 percent with oil prices. Interest rate expectations for the June Fed meeting are holding steady at 66 percent.

The Markit and ISM Manufacturing surveys came in below expectations, although both showed expansion in the manufacturing sector. Markit’s April reading was 52.8, ISM’s was 54.8. Construction spending in March dipped 0.2 percent, most likely due to late winter storms. Spending was up 3.6 percent from year-ago levels.

April auto sales data will be available on Tuesday. This will be important for second-quarter personal consumption forecasts. The Atlanta Fed’s initial GDP growth forecast for the second quarter is 4.3 percent. First-quarter productivity and unit labor costs and March factory orders will be released on Thursday, and the monthly employment report is due on Friday.

Overseas, major markets were closed on Monday for May Day across Europe and Asia. Europe’s manufacturing PMIs will be released Tuesday due to the holiday. Japan’s market will close Wednesday thru Friday for three separate holidays. The Australian central bank will hold a policy meeting on Tuesday.

Energy prices started the week on the decline, with West Texas Intermediate crude oil falling below $49 a barrel. Energy equities slipped as well. Energy sector funds are threatening to close at a new 2017 low this week.

Treasury bond yields advanced on Monday, led by 10-year and 30-year Treasury yields. The U.S. dollar opened the week flat, gaining against the yen, British pound and Canadian dollar, but weakening versus the euro and Australian dollar. The Federal Reserve meets on Wednesday.

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