Weekly Economic Summary - 1/29/2018Submitted by Miller Financial Group, LLC on January 29th, 2018
U.S. stocks are taking a breather this morning after finishing another record breaking week last week. In early trading this morning the Dow is down 100 points while the S&P500 and Nasdaq are also in the red. Last week, all three major U.S. indices closed at record levels with the S&P500 on pace to record its fifth best start to a year since 1950.
Earnings reporting will be a market driver this week with 125 S&P500 companies scheduled to report their results including big players like Apple, Amazon, Alphabet, Facebook, Microsoft, Boeing and McDonalds. So far, earnings results have lived up to expectations. According to FactSet, the blended earnings growth rate for the fourth quarter has increased to 12% from 11% while the blended revenue growth rate has increased to 7% from 6.7%. In addition, the full year 2018 earnings growth rate has jumped to 16.3% from 12.2% with revenue growth projected to be 6%.
A busy week on the economic reporting front was kicked off this morning with the release of the personal-consumption expenditures index which is the preferred inflation gauge of the Federal Reserve. The core rate which excludes food and energy rose 0.2%, however inflation over the past year slipped to 1.7% from 1.8%. This shouldn’t change the direction that most experts are expecting from the Fed, which is an interest hike when the central bank meets in March. In other economic news, the closely watched employment situation report for January is due out on Friday.
Finally, all eyes will be tuned into President Trump’s first State of the Union Address tomorrow evening. President Trump is expected to highlight the benefits from the recently passed tax reform plan while setting the stage for the next wave of his campaign promises - infrastructure spending, immigration reform, trade and foreign policy.
Have a great week!