What We Saw Last WeekBig banks reported earnings. Earnings season is upon us. On Friday, we saw JPMorgan Chase, Bank of America, and PNC Financial beat profit expectations. These positive results add some weight to the post-election financials rally, where financial-sector equities in the S&P 500 have added 17% since the election. A number of other banks will report this week, and we will look to see if their performance also matches the growth we have seen so far. Retail sales grew. The December monthly retail sales report showed a 0.6% increase, slightly below the 0.7% consensus expectations. With this growth, retail sales are now up 4.1% in the past year. However, not all retailers are performing well. General merchandise stores are suffering as consumers continue to shop online and move away from in-person retail stores. We see the results of this trend in declining retails sales numbers and large companies announcing store closures, including Macy’s, Sears, CVS, and many more. Consumer sentiment was high but divided. The University of Michigan’s monthly report on consumer sentiment was 98.1, just below predictions but still near highs we have not seen since 2004. One interesting finding in the report is a strong partisan divide in consumer confidence. Richard Curtin, director of the consumer survey, described “extreme differences” between people’s expectations for whether new political policies would help or hurt the economy. He reminded people that the most impact on consumer sentiment will come from “actual changes in the economy” as a result of Trump’s work, which we will have to wait a few months to see.
What We’re Looking at in the Week AheadEarnings season continues. The markets will be watching earnings closely during this four-day trading week-especially to see if other major financial institutions also beat expectations. Some analysts believe that to keep the current market rally going and demonstrate that there is weight behind the post-election growth, we’ll need to see excellent reports from most companies. A number of high-profile companies report this week, including:
- Morgan Stanley
- Goldman Sachs
- American Express
- UnitedHealth Group
- General Electric Co.
ECONOMIC CALENDAR:Monday: U.S. Markets Closed in Observance of Martin Luther King, Jr. Day Wednesday: Consumer Price Index, Industrial Production, Housing Market Index Thursday: Housing Starts
Quote Of The Week
“Wealth is the ability to fully experience life.” – Henry David Thoreau