February 13th – Weekly Update

  • U.S. equity indexes posted gains for the week as expressed by the Dow Jones, Nasdaq and S&P 500. Oil slightly dipped during the period and gold finished higher. The 10-year U.S. Treasury yield closed at approximately 2.41%.
  • With 71% of S&P 500 companies having reported fourth quarter results, 67% have beaten earnings expectations while 52% have beaten sales expectations. According to FactSet, the fourth quarter blended earnings growth rate for the S&P 500 is 5.0%. If the index reports earnings growth for the quarter, it will mark the first time the index has recorded year-over-year earnings growth for two consecutive quarters since Q4 2014 and Q1 2015. Hasbro, Panera Bread and Deckers Outdoor impressed this week; Aratana Therapeutics, Michael Kors and Gilead Sciences were among the disappointments.
  • Difficulties in enacting President Donald Trump’s policy initiatives, in the background since his November election, were a primary narrative thread during the week. Regulatory relief, tax reform and Obamacare repeal remain bogged down by logistical challenges and disagreement on approaches. President Trump made the statement that “something phenomenal” will likely be announced on taxes in the next two to three weeks.
  • Initial jobless claims fell 12K to 234K in the week ended February 3, below the 250K consensus and just above the 233K cycle low reported back in November. This represents the longest streak (101 weeks) of claims below the 300K level since 1970. The four-week moving average fell to 244K from 248K, a new cycle low.
  • According to the Mortgage Bankers Association, U.S. mortgage applications rose 2.3% in the week ended February 3, compared to a 3.2% drop in the previous week.
  • The Eurozone Sentix Investor Confidence Index, which measures the six-month economic outlook for the area, came in at 17.4, in line with expectations. The Markit Eurozone PMI Services Business Activity Index was 53.7 in January, unchanged from December’s reading.
  • Year-over-year Chinese imports grew 16.7% in January, compared to the 10.0% consensus and the previous measurement of 3.1%. Year-over-year exports in China grew 7.9%, compared to the 3.3% consensus and previous measurement of a 6.1% decrease.

CPWM Weekly Market Monitor (2017.02.13)