Markets, Economy

Weekly Kickstart (01/22/2018-01/26/2018)

1/22/18 8:00 AM

/iStock-522646895.jpgThe market melt-up continued last week, as the S&P 500 rose by 0.86 percent to 2,810.30. That was another new all-time closing high, and therefore a sign that investors, at least for now, are not overly concerned about a temporary government shutdown. An overall healthy economy and the recently passed tax cuts have contributed to the resiliency of the current bull market, and it appears that corporate earnings may provide another tailwind. Indeed, corporate earnings season for the fourth quarter of 2017 has just started, but among of the companies that already reported the results are encouraging. Specifically, 68 percent of the companies in the S&P 500 that have reported their Q4 results have beat their average earnings per share (EPS) estimate, according to new FactSet data, and 85 percent have beat their mean sales estimate.


Ten sectors are reporting or are predicted to report year-over-year earnings growth, including four that are expected to report double-digit earnings growth: Energy, Materials, Information Technology, and Utilities. The Financials sector is the only sector seen reporting a year-over-year decline in earnings. Looking ahead, analysts have significantly increased their earnings expectations for S&P 500 companies for 2018 since the tax reform bill was passed, and nine sectors have recorded an increase in their bottom-up EPS estimates for 2018. However, what all of this means for equities in the near-term remains unclear, which is why retirement investors should instead stay focused on the long-term goal of amassing wealth. Assistance with that endeavor is available through the consistent use of tax-advantaged savings vehicles, dollar-cost averaging, and regularly consulting with a professional financial advisor. As always, we are here to help with any questions you may have.


To recap a few of the things we learned about the economy last (holiday-shortened) week, the positives included that mortgage and refinance applications increased, industrial production jumped, capacity utilization rose to a 2-year high, and the number of Americans making first-time claims for unemployment benefits plunged to the lowest level since 1973. As for the negatives, building permits fell, housing starts declined, homebuilder optimism cooled, regional manufacturing activity moderated, and consumer confidence slid. This week the pace of economic data remains slow, but there are still a few important reports on manufacturing, housing, and employment scheduled to be released, along with the first government estimate of U.S. gross domestic product (GDP) growth during fourth quarter of 2017 due out on Friday.


**A more detailed snapshot of the U.S. economy can be found here.**

What To Watch:








Sources: Econoday, FactSet, FRBSL

Post author: Charles Couch