Markets, Economy

Weekly Kickstart (02/20/2018-02/23/2018)

2/20/18 8:00 AM

/iStock-532854850.jpgStocks rebounded last week, as the S&P 500 surged by 4.30 percent to 2,732.22, the largest gain since 2013. That welcome turnaround from the correction seen earlier this month also left the benchmark index up 2.19 percent year-to-date, and just 4.90 percent below the all-time closing high. Seeing stocks rebound after the worst week for the market in more than two years is not too surprising, and one thing that likely helped attract investors back into equities was the fourth quarter corporate earnings season. Indeed, of the 80 percent of companies in the S&P 500 that have reported their Q4 results, 75 percent have beat their average earnings per share (EPS) estimate, according to new FactSet data. Another 78 percent of firms have beat their mean sales estimate, which puts Q4 on track to be the best quarter for revenue growth since FactSet began tracking this metric in 2008.


Looking ahead, 127 S&P 500 companies have already issued positive EPS guidance for 2018, more than double the 10-year average and a new all-time high. Moreover, record levels of positive guidance are being reported by companies in the Health Care, Industrials, Information Technology, and Consumer Staples sectors, which the report’s authors attribute to the recent tax reform in Washington, as well as the improving global economy and weaker U.S. dollar. Although encouraging, retirement investors should still focus less on near-term market fluctuations and more on the long-term goal of amassing significant 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 week, the positives included that housing start rose, building permits increased, regional manufacturing activity remained elevated, initial jobless claims held near a multi-decade low, consumer confidence rebounded, and small business owner optimism rose to one of the highest readings on record. As for the negatives, mortgage and refinance applications fell, industrial production contracted, capacity utilization decreased, retail sales unexpectedly declined, and household, wholesale, and trade-related inflation pressures in America all continued to rise. This holiday-shortened week the pace of economic data slows down considerably but there are still a few important reports on manufacturing, housing, and employment scheduled to be released, along with the potentially market-moving minutes from the last FOMC meeting due out on Wednesday.


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

What To Watch:


  • US Holiday: Presidents Day







Sources: Econoday, FactSet, Bloomberg, FRBSL

Post author: Charles Couch