which’s right now up to corporate America to reveal whether the U.S. economy simply hit a soft patch which winter, as many suspect, or will be on the verge of falling into an even deeper rut.
Earnings by a broad swath of industries, like financials, technology, transportation in addition to consumer products roll out from the coming week as the first-quarter earnings season gets underway. According to Refinitiv, earnings are required to decline 2.3 percent from the first negative quarter in three years, yet which will be business leaders’ comments on the future outlook which are even more important.
Commentary in addition to guidance will be always a big deal, yet which quarter which will be critical. Analysts do not agree on whether the first quarter earnings season represents the trough, or even whether the second quarter will see a gain or decline in profit growth.
At the same time, economic data, like March’s jobs report, are beginning to turn more positive, in addition to first quarter growth has quickly gone by forecasts of nearly flattish back in January to right now around 2%, on the back of better March releases. The economic data has been uneven, in part because of the government shutdown, yet which has yet to prove the economy will be back on track.
“The market has been very sensitive to data which’s been picking up. The market will be reflecting which, even though there’s talk of an earnings recession. What you don’t want will be an earnings recession leading to an economic recession. If companies believe there’s a major downturn in revenue growth, they stop spending in addition to ultimately they fire people in addition to which leads to a recession,” said Quincy Krosby, chief market strategist at Prudential Financial.
The stock market will be also at an important inflection point, with the major indexes closing in on all-time highs. The S&P 500 pressed through 2,900 Friday, seen as a point of psychological resistance. The S&P ended the week at 2,907, for a weekly gain of 0.5%. The next target traders are watching will be the closing high 2,930 on the S&P. The all-time high was an intraday 2,940, reached on Sept. 21.
Earnings season got off to a not bad start with J.P. Morgan Chase’s quarterly earnings report Friday. CEO Jamie Dimon was very positive, saying the U.S. economy’s expansion “could go on for years.”
“If you look at the American economy, the consumer will be in not bad shape, balance sheets are in not bad shape, people are going back to the workforce, companies have plenty of capital,” Dimon told analysts during a conference call. J.P. Morgan stock rose sharply, after its record profits beat analysts’ expectations.
“Positive guidance, which’s what the market needs. [The S&P] could cross 2,900, yet then again which could pull back,” said Krosby, yet she said the momentum has been pointing higher. “The market has basically been endorsing 2,900 in addition to beyond.”
Krosby said important upcoming economic reports include Empire State in addition to Philadelphia Fed surveys Monday in addition to Thursday respectively, for a current look at manufacturing activity in fresh York in addition to the Mid-Atlantic region. There will be also industrial production in addition to retail sales Tuesday.
“Jobs data was strong. Everybody was genuinely negative on the economy, in addition to right now we’re getting pleasant surprises,” said Marc Chandler, Bannockburn Global Forex chief market strategist. The economy added 196,000 jobs in March, bringing the monthly average to 180,000 over the past three months, even with February’s shockingly low 33,000 payrolls.
Chandler said industrial production in addition to some other data should show an much better trend over last month.
As stocks have shaken off growth fears, bond yields have also moved higher. The 10-year Treasury note was yielding 2.55% Friday, well above the lows of 2.34% reached on March 28.