Earnings starts to pick up this week

BY  | FROM  | 2016-04-11 15:26

For the week, the market closed at 2,047.60, off 1.21% for the week, as it remained in the black for the year-to-date, up 0.19%, after closing at its 2016 high last week (up 1.41% year-to-date).
For the week, 131 issues gained, a full reversal of last week’s 411 issues, when the market closed at its 2016 high, and it was more in line with the prior week’s 125 issues.  Decliners increased to 372, from last week’s 91, and were higher than the prior week’s 375.  Three issue gained at least 10% (one did last week and one the week before that) and 12 others were up at least 5% (four were last week).  Seven issues declined at least 10% (one did so last week), as 47 issues lost at least 5% (four did so in the prior week).  Year-to-date, breadth remained positive, as 281 issues were ahead, down from last week’s 312 issues; 110 issues gained at least 10% (132 last week), compared with 222 down issues, off from last week’s 191, with 90 of them down at least 10% (80 last week).
Sector results were more varied, as the 1.21% decline saw four sectors moving more than 2% (3 down and 1 up), and eight of the ten posting declines.  Energy did the best, thanks to the 2.02% Friday gain, helped by oil’s 6.4% rise that day, as the sector posted a 2.20% weekly gain, bringing its year-to-date rebound to 3.92%.  The sector has gained 14.72% since the February 11, 2016 low, but it remains 20.55% off the May 21, 2015 index high (the index is 3.91% off the high).  Health care was the other gainer, up 0.89% for the week, as it remains in the red year-to-date, off 3.88%.  Financials did the worst, off 2.91%, as its prospects continued to decline, along with its Q1 2016 estimates (big banks start next Wednesday, with JPMorgan); the sector is the worst performing year-to-date, off 7.60%.  Consumer stocks declined, as consumer staples fell 0.51%, better than the overall index, but consumer discretionary fell 2.06%; year-to-date, consumer staples is up a healthy 5.62%, as consumer discretionary remains in the red, off 0.39%, but still better than the overall index.  Both telecommunication services and utilities retreated, off 2.22% and off 1.97%, respectively, but they remain the best performers’ year-to-date, up 12.20% and up 12.69%, respectively.  Of note within telecommunication services, AT&T (T) and Verizon (ZV) both went ex-dividend, accounting for 1.01% of the 2.33% sector fall. Trading volume increased 10% for the week, ahead of the earnings season, as it remains 2% lower than the one-year average.  Measurable volatility (the high-over-low price variance) remained low even as daily results varied, as the rate decreased to 1.98% from the prior week’s 2.31% (and a low 1.69% the week before that), and it is much lower than the 3.02% one-year average.
The S&P 500 declined USD 230 billion for the week, compared with last week’s gain of USD 335 billion, and it is off USD 41 billion year-to-date (partially due to reweighting and membership changes), as it represented 42.33% of the BMI, down from last week’s 42.60% representation; it represented 41.61% at year-end 2015. The Nikkei was down 2.12% for the week (up 4.93% last week) and is off 16.88% year-to-date.  The Shanghai was off 0.82% for the week (up 1.01% last week) and is off 15.66% year-to-date. Trading should start to center on expected earnings, which may permit groups to move in unison—until specific issues report.  Earnings will start next week, as 15 issues will report, and the Street’s anticipation for the next week’s 134 issues (and 167 the week after) starts to build. 
Next week’s highlights will include the traditional Dow Jones Industrial Average opener and aluminum maker Alcoa after the close on Tuesday (Alcoa is no longer in the Dow, as athletic footwear maker NIKE is now the first Dow issue).  The real start, however, will be Wednesday when the big banks start, with J. P. Morgan (JPM), Bank of America (BAC), and Wells Fargo (WFC) reporting on Thursday, and Citigroup (C) reporting on Friday.  Expectations are low for the banks, as continued low interest rates hurt margins, lower M&A cut into fees and trading, and reserves for bad loans are expected to increase due to lower quality debt issues related to energy.  Economic reports will center on Tuesday’s Export/Import report and Wednesday’s Retail Sales and PPI report, and then they will move on to Thursday’s CPI report.  Friday’s Industrial Production and Capacity Utilization report will also get attention but may not generate any market reaction (absent an extreme unexpected report). 

    Related News

      Financial Times

    • Fed fears market misreading of guidance
    • The US Federal Reserve is keen to revamp its forward guidance about future interest rates but terrified of a market misunderstanding, according to the minutes of its September meeting


    • Asian shares rebound after Fed renews dovish credentials
    • Asian shares bounced back and the dollar fell on Thursday after minutes of the U.S. Federal Reserve's latest policy meeting showed policymakers have some concerns about downside risks to the global economy and the dol...


    • Nigeria succeeds at containing Ebola
    • People here are shaking hands again, kissing, hugging, touching. These days, shops are open, people are working, and children are finally going back to