Stocks Rise into Earnings Season – Monday Morning Market Memo – April 8, 2019

Good morning,

Stocks posted solid gains last week, lifted by hopes for a trade deal and a better-than-expected U.S. jobs report. Chinese Vice Premier Liu He said a “new consensus” had been reached in trade negotiations between the US and China, according to official state news website Xinhau, and this lifted investor sentiment. Investors were also encouraged by the March Jobs Report.

The Department of Labor reported Friday that the U.S. economy added 196,000 jobs last month (versus expectations for gains of 175,000) and the unemployment rate held steady at 3.8%, with notable job gains occurring in health care and in professional and technical services. For the week, the Dow Jones Industrial Average rose 1.9% to 26,424 – the NASDAQ Composite jumped 2.7% to 7,938 – and the Standard & Poor’s 500 Index gained 2% to 2,892. In addition to the economy and trade, the stock market will now be getting earnings reports to digest.

Earnings Season (unofficially) begins this week, highlighted by the financial sector, with Wells Fargo, JPMorgan Chase and PNC Financial Services Group scheduled to report. Other companies reporting include Bed Bath & Beyond, Fastenal, WD-40, and Delta Air Lines. As we discussed previously, expectations are low for first quarter earnings results. According to FactSet, the estimated earnings decline for the S&P 500 is 4.2%, which would mark the first year-over-year decline in earnings for the index since the second quarter of 2016. The bright side about low expectations is that it is easier to impress, and of course forward guidance will be important as well.

As always, don’t hesitate to contact us with any questions or if you would like to set up a meeting.

All the best,

Southport Station Financial Management, LLC