- Earnings season has been a success by virtually any measure, with an impressive upside surprise, very strong growth, and positive guidance overall.With 409 S&P 500 companies having reported, S&P 500 earnings for the first quarter are tracking to a nearly 26% year-over-year increase, well above the 18.5% consensus estimate as of quarter end. The revenue picture is similarly positive, with more than 1% upside to prior estimates, producing an 8.4% annual increase. Despite a high bar, estimates have risen by almost 1% during reporting season, reversing the historical pattern of estimate cuts. Concerns that surfaced recently about possible peak earnings growth are premature in our view, whereas the number of companies citing margin pressures from rising costs has generally been limited. The earnings parade slows down this week with just 44 S&P 500 companies slated to report. Look for more from us on earnings in an upcoming Weekly Market Commentary.
- Sell in May? Today in our Weekly Market Commentary we take a closer look at one of the most popular investment sayings of them all: “Sell in May and Go Away.” Since 1950, the May-through-October period has been the worst six months for stocks — which has many wondering if they may better off simply avoiding stocks over the next six months. The issue with this is that five of the past six years have seen the S&P 500 Index close higher during the period, gaining 4.8% on average. This week, we will explain why we think 2018 could see another year of gains during the “worst six months of the year.”
 Please note: The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of predecessor index, the S&P 90.
- Second-longest expansion. The current economic expansion has reached 107 months, topping the 106-month expansion from the 1960s to make it the second longest since World War II. Only the 120-month expansion during the 1990s was longer. Today on the LPL Research blog we take a closer look at the current expansion and explain why there is a good chance it could make it to the number one spot.
- Data deluge brings good news (but not too good). The first week of the month–last week–brought us a data deluge covering jobs, inflation, and business activity, not to mention a Federal Reserve policy meeting. Today’s Weekly Economic Commentaryreviews what we learned from the busy week and looks ahead to the rest of the month.
- Oil tops $70/barrel. The potential for reinstatement of Iran sanctions pushed WTI crude oil over $70 for the first time since November 2014. Venezuelan production disruptions and Saudi Arabia’s stated preference for an $80 price per barrel, on top of strong global demand and an easing inventory glut, have pushed U.S. oil to fresh multi-year highs despite recent strength in the U.S. dollar. We do not believe fundamentals support sustained prices above current levels but are content to “ride it” from a technical perspective for the time being and maintain our neutral views on oil, the energy sector, and master limited partnerships.
- The week ahead. This week’s economic calendar is highlighted by global trade data with import/export and national account figures scheduled for the United States, Germany, Japan, and China. Domestically, look for important producer and consumer inflation data on Wednesday and Thursday, respectively; small business optimism, wholesale data (sales and inventories), and job openings/labor turnover are also noteworthy. Elsewhere, European data to monitor include industrial production figures out of Germany, France, and the United Kingdom. The docket in Asia includes the minutes from the last Bank of Japan monetary policy meeting, and China’s consumer and producer inflation for April. NAFTA talks, ongoing China trade negotiations, the fate of the Iran nuclear deal, and Treasury auctions will also battle for investors’ attention.
Monitoring the Week Ahead
- Germany: Factory Orders (Mar)
- China: Imports & Exports (Apr)
- China: Trade Balance (Apr)
- NFIB Small Business Optimism (Apr)
- Germany: Trade Balance (Mar)
- Germany: Imports & Exports (Mar)
- CPI (Apr)
- UK: Trade Balance (Mar)
- UK: GDP estimate (Apr)
- Import & Export Price Indices (Apr)
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