Get the popcorn. Here come earnings.
Sure, last week brought some major news: Jobs reports, missile attacks on Syria, meetings between President Trump and Chinese Premier Xi. But markets hardly budged.
The S&P 500, for instance, slid 0.3 percent between Friday, March 31, and Friday, April 7. The index had its tightest range (just 34 points between the week’s high and low) in a month, while its overall move was the smallest since late January.
Stocks, after all, are dependent on fundamentals. And the reporting season that begins this week is projected to show the quickest earnings growth in over five years, according to a compilation of Wall Street estimates from FactSet.1 The first important scheduled releases begin on Thursday with major financials like JPMorgan Chase (NYSE: JPM), Citigroup (NYSE: C), and Wells Fargo (NYSE: WFC). Aside from those, traders may want to be on the lookout for analyst commentary and unscheduled preannouncements from companies.
To say last week was a snooze may be an understatement. Real Estate Investment Trusts were the biggest-moving sector, rising just 0.7 percent. Energy eked out a gain of almost 0.5 percent, but is made somewhat more interesting because several potentially bullish options transactions were detected.
Staples (NASDAQ: SPLS) was the best-performing single member of the S&P 500, surging 11 percent after Dow Jones reported the office-supply retailer was powwowing with buyout firms. DXC Technology (NYSE: DXC), a new company formed by the merger of CSC and a division of Hewlett Packard Enterprise (NYSE: HPE), was the No. 2 stock, up 9 percent.
Lighting provider Acuity Brands (NYSE: AYI) led to the downside with a 15 percent drop after earnings missed estimates. Analyst moves also likely contributed to some high-flying chip makers coming down to earth: Advanced Micro Devices (NASDAQ: AMD), which was only added to the S&P on March 20, dropped 7 percent after Goldman Sachs initiated the stock with a Sell rating. Nvidia (NASDAQ: NVDA) took an 8 percent hit after getting cut to Underweight at Pacific Crest.
Another story last week was a big change in the auto space as investors digested poor vehicle sales for March.2 Auto-part suppliers Borgwarner (NYSE: BWA) and Delphi Automotive (NYSE: DLPH) were among the S&P’s biggest losers with declines of 9 percent and 7 percent, respectively. It’s also noteworthy that the market value of electric-car maker Tesla Motors (NASDAQ: TSLA) surpassed industry stalwarts General Motors (NYSE: GM) and Ford Motor (NYSE: F) for the first time last week.
Don’t forget that this week is shortened because of the Good Friday holiday. It’s pretty quiet aside from those earnings, although a few events are slated: Federal Reserve Chair Yellen speaks this afternoon, oil inventories are due on Wednesday morning, and consumer sentiment comes out on Thursday.
1. FactSet: Earnings Insight. 3/31/17. Bloomberg: Nobody Is Saying Anything About How U.S. Earnings Season Will Go. 4/7/17.
2. Marketwatch.com: Vehicle sales in March drop to two-year low. 4/3/17.