As investors, the best thing about earnings season is it filters a lot of the other noise out of the market. A month ago, a tweet, tariff headlines or even a longshot tax proposal would have moved the equity markets.
The broad markets performed as expected this week as the Federal Reserve announced its much expected rate hike Wednesday. The Dow Jones Industrial Average did set a new high after the announcement but finishes the week up only 0.4 percent.
Global elections continue to stir up markets this week. U.S. stocks and the dollar rose as the British pound declined after the U.K.’s Conservative Party lost its parliamentary majority just as the Brexit negotiations begin
The S&P 500 was up nearly 1 percent again this week as economic data continues to confirm a growing economy. An underwhelming jobs report on Friday took yields on 10-year U.S. Treasuries to a new low on the year of 2.15 percent.
Buoyed by the best quarterly earnings growth in six years, blue chip equities are forging new highs, with investors disregarding the turmoil in Washington and discounting increasingly lofty expectations for the remainder of 2017.
Political risk has always been frustrating for investors. We like the rules of the game to be known and the playing field level. Any kind of uncertainty leads to volatility in markets. While many believed that the Republican sweep would deliver pro-growth initiatives, Trump’s troubles have led to concerns regarding those outcomes.
In a week full of geopolitical news, the market showed a bit of malaise. The S&P 500 posted a small loss of 0.4 percent. Bonds were similarly docile with the 10-year U.S. Treasury ending the week off two basis points at 2.3 percent.
The S&P 500 headed toward a third weekly increase on a rebound in hiring and economic optimism. The benchmark 10-year Treasury is currently trading at a yield of 2.35 percent, which is lower for the day but seven basis points higher than last week. The euro reached its highest level of the year, at 1.098, against the U.S. dollar, rallying on polls that favor a Macron win in France. Oil regained 2 percent after briefly dropping below a six-month low of $44 per barrel due to mounting concerns over a supply glut.
As investors, the best thing about earnings season is it filters a lot of the other noise out of the market. A month ago, a tweet, tariff headlines or even a longshot tax proposal would have moved the equity markets. But now that we are in the throes of earnings season, equity investors are focused on the most important factor in investing: earnings.
First quarter earnings season kicked into high gear this week and investors were treated to a smorgasbord of blue-chip results across a range of industries. As they typically do, numbers for most companies have exceeded Wall Street expectations, but with almost 20 percent of the S&P 500 now having reported, the .75:1 ratio of “beats” is modestly better than where it has been over the last several quarters.