All-time Highs into Earnings Season! – Monday Morning Market Memo – July 15, 2019

All-time Highs into Earnings Season! – Monday Morning Market Memo – July 15, 2019

Good morning,

The three major stock market indices all closed at record highs last week following congressional testimony by Federal Reserve Chair Powell that cemented expectations for an interest rate cut at the end of this month, and possibly more after that. The new record closing numbers are 27,332 for the Dow Jones Industrial Average, 3,013 for the Standard & Poor’s 500 Index, and 8,244 for the NASDAQ Composite. Bottom line, the market is following the philosophy – “don’t fight the Fed”.

The probability is now 100% the Federal Reserve will lower rates this month, according to CME FedWatch Tool. Assuming the Fed does not surprise the markets with a change of course, investors will be shifting much of their attention to the upcoming earnings season, which gets going in earnest this week, highlighted by the major banks. Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, and Bank of America are all scheduled to report in the week ahead. Away from the banks, earnings reports will be flowing in from companies such as Johnson & Johnson, International Business Machines, Intuitive Surgical,Union Pacific, Honeywell, Microsoft, and UnitedHealth Group.

Overall, for the second quarter of 2019, earnings for the S&P 500 are expected to decline 3%, according to data from FactSet. With earnings expectations set relatively low, it is not as hard for to companies to impress with their reports. Also, keep in mind forward guidance is usually more important than results for a quarter that is already over. Ready or not, here come the earnings! As always, call us with any questions you may have or if you would like to set up a meeting.

All the best – Southport Station Financial Management, LLC