Market Perspective for September 6, 2016

Most equities opened higher on Tuesday following the long weekend, despite Friday’s less than stellar jobs report and mixed signals from the Federal Reserve. The European Central Bank (ECB) is scheduled to announce rate decisions this week. Pressure to increase quantitative easing continues to mount due to overall weakness in Europe and post-Brexit challenges, though the ECB is expected to stay its original course and hold rates steady this week. The ECB’s announcements will be preceded by the Royal Bank of Australia (RBA)’s interest rate decision and fiscal statements from world leaders attending this past weekend’s G-20 Summit in China.

This week’s economic reports will include services Purchasing Managers Index (PMI) readings from China and the UK as well as eurozone retail sales. While the Chinese PMI reading is expected to remain steady, analysts anticipate that the UK figures will rise significantly. The most recent Chinese Consumer and Producer Price Indexes (CPI and PPI) are slated to be released Friday morning. The CPI numbers are expected to remain steady, and the PPI figures are projected to decline slightly. The latest gross domestic product (GDP) figures for Australia, Japan and the eurozone will also be released this week. Analysts predict that the reports will show continued slow growth.

In domestic news, the Job Openings and Labor Turnover Survey (JOLTS) report and the ISM nonmanufacturing index for August will be available. Analysts anticipate a rise in job openings with the strengthening labor market, while the ISM nonmanufacturing index is expected to reflect a slight decline.  The weekly mortgage applications index, oil inventory data and initial unemployment figures will be out mid-week. The latest Fed Beige Book will also be released on Wednesday.

Hewlett Packard Enterprise, Conn’s, Kroger’s and Hovnanian Enterprises will report quarterly earnings this week as the season winds down. Hewlett Packard Enterprise (HPE) is scheduled to announce its latest earnings per share (EPS) and revenue numbers after the bell Wednesday as investors scrutinize the rumored sale of the firm’s software division. Furniture, appliance and electronics retailer Conn’s (CONN) will report Thursday before the opening bell, offering investors a glimpse into consumer and housing market health.

Retail grocery chains, Kroger’s (KR) and Hovnanian (HOV) will report before the bell Friday. Kroger’s streak of upside EPS and revenue surprises in light of its falling same-store sales garnered much attention last quarter.  Investors will also watch HOV for continued stellar numbers.

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