This week will be an important one for companies reporting earnings. There will be 126 S&P companies reporting this week. This includes 3 of the biggest stocks in the world in Apple, Microsoft and Amazon. The good news is that 20% of the S&P companies have already reported earnings and so far they have been positive. Earnings growth has been around 10.9% with revenues rising 6.1% year-over-year. Also, 88% of technology companies have reported earnings better than expected. This is something to keep an eye on because this was a sector that got hit hard at the end of 2018.
On Wednesday the Fed will announce a decision on interest rates. Not many people expect them to change rates. However, as we saw last year, the Fed doesn’t have to do much to change markets. Jerome Powell’s comments last October contributed to one of the biggest drops in the history of the stock market. We believe it will be a fairly laid back Fed meeting. The Fed has two tools. One is interest rate policy. The other is a $4 trillion dollar balance sheet of bonds that they may or may not reduce at a certain pace. We are in a new era of Fed policy.
For years we have struggled with people being underemployed or discouraged about the job market. Some quit their jobs while others pursued different avenues. For the first time since 1996, 23 years, the underemployed number has dropped. This shows you how deep and wide job recovery has been. When you can reverse a number, to the positive, that has been out there for a quarter of a century that could lead to some good things.
As of last Friday the government shutdown has temporarily ended. This was the longest shutdown in U.S. history lasting 35 days. While the shutdown has ended, there is still uncertainty that lies within. Markets tend to not like uncertainty, so it will be important to see what negotiations come out of this during the next 3 weeks. We could see some volatility in the markets during this time. A positive item that could come out of this is GDP growth. Each week that the government shutdown was occurring GDP growth was taking a hit. Now that the government shutdown has ended, at least for the meantime, we could possibly see GDP growth pick back up.
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth in this presentation may not develop as predicted.
No strategy can ensure success or protect against a loss.
Stock investing involves risk including potential loss of principal.
Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.