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.


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