Short On Time… Executive Summary
Monday was a holiday, so all markets were closed. The market is down a fair amount this morning on self-inflicted Greenland drama. I don’t think this has any impact on corporate earnings in America long term, but threats of tariffs in the short term don’t help. Keep in mind the Supreme Court will eventually rule on the tariffs. Our best guess is the Trump administration has a backup plan in place. Trade deals have been made based on these tariffs, so as I mentioned in the first quarter update, cancelling them is akin to trying to unbake a cake. Good luck with that. Earnings season ramps up this week. Let’s pay attention to that.
The Week On Wall Street
Stocks ended last week with modest losses after a volatile five days of market-moving economic data, geopolitics, and Fed drama. The Standard & Poor’s 500 Index slid 0.38 percent, while the Nasdaq Composite Index skidded 0.66 percent. The Dow Jones Industrial Average edged down 0.29 percent. By contrast, the MSCI EAFE Index, which tracks developed overseas stock markets, rose 1.41 percent.
Choppy Trading
Stocks started the week lower after pre-opening bell news that the Justice Department had launched a criminal investigation into Federal Reserve Chair Jerome Powell. A statement issued Tuesday morning by central bankers worldwide helped tamp down market volatility.
The White House called for a 10 percent cap on credit card interest rates for 1 year, putting pressure on financial stocks. Meanwhile, news that headline inflation matched forecasts while core inflation came in cooler than expected was well received by investors. Despite solid retail sales and wholesale inflation reports for November, stocks were under pressure on Wednesday due to geopolitical tensions and disappointing Q4 results from a handful of financial stocks. Then chip manufacturers and banks led a rebound, recouping most of the week’s losses. Markets opened higher on Friday but then slid after the president backtracked on his preferred candidate to be the next Fed Chair. His comments led investors to believe that his new choice would be more market-friendly but perhaps less likely to adjust interest rates.
Fed Drama
Tensions between the White House and the Federal Reserve escalated last week after the Justice Department issued a criminal indictment against Fed Chair Powell. Powell, typically calm and collected in the face of criticism, posted an assertive video Sunday night. By the close of the week, however, investors seemed to have moved past the Fed drama as there was plenty of other news to follow.
This week: Key Economic Data
Wednesday: Construction Spending* (Nov). Pending Home Sales.
Thursday: Weekly Jobless Claims. Gross Domestic Product, Q3 (first revision). Personal Consumption Expenditures (PCE) Index* (Nov).
Friday: Consumer Sentiment. Purchasing Managers’ Index (PMI)—Services & Manufacturing.
This Week: Notable Companies Reporting Earnings
Tuesday: Netflix, Inc. (NFLX), Interactive Brokers Group, Inc. (IBKR), 3M Company (MMM), U.S. Bancorp (USB)
Wednesday: Johnson & Johnson (JNJ), The Charles Schwab Corporation (SCHW), Prologis, Inc. (PLD)
Thursday: Procter & Gamble Company (PG), GE Aerospace (GE), Intel Corporation (INTC), Abbott Laboratories (ABT), Intuitive Surgical (ISRG), Capital One Financial Corporation (COF)
Stay tuned...
