Weekly Economic Summary - 5/22/2017Submitted by Miller Financial Group, LLC on May 22nd, 2017
U.S. stocks are off to a roaring start today following a roller coaster of a week last week. In early trading this morning, the Dow is up nearly 0.4% and the S&P500 is up 0.28%.
On Wednesday of last week, the markets took a sharp turn negative amid reports that President Trump asked then Federal Bureau of Investigation Director Comey to stop an investigation into Russian meddling of the U.S. election. This brought about talk that if this was true then a statement like this would be obstruction of justice and a possible impeachable offense. This news brought about a market tumble that we haven’t seen in several months. Both the Dow and S&P500 dropped nearly 1.8% on the day on concerns that an investigation into this matter could cause delays in the implementation of the administration’s growth initiatives of tax reform, deregulation and infrastructure spending and possibly prevent them from coming to fruition at all. The market decline was short lived however with U.S. stocks rallying nearly 1.1% on Thursday and Friday closing the week with a modest 0.4% decline.
Despite the political turmoil that seems to be surrounding the President, the U.S. and global economies are still strong and Q1 earnings have been the best since Q2 2011. Every sector saw a sizable upward revision to the first quarter earnings growth estimates seen on March 31 with 75% of the S&P500 companies reporting results that exceeded consensus earnings estimates which is above the 5 year average of 68%. The blended sales growth rate for Q1 is 7.7% which is the highest revenue growth since Q4 2011. With earnings season now winding down, investors will be looking for other positive economic reports to distract them from the political headlines.
The news on the docket this week may not provide enough of a distraction with only a handful of market moving events leading into a holiday weekend. A summary of those events include the release of the Federal Open Market Committee Minutes from the May 2-3 meeting on Wednesday, data on home sales and the OPEC/non-OPEC production meeting on Thursday. Oil has been on the rise lately bolstered on the possible extension and deepening of production cuts at the OPEC/non-OPEC meeting. Trump could still rob the headlines this week as he takes his first trip abroad with stops in the Middle East. Reports of a major arms deal with Saudi Arabia have been the highlights which is giving a nice boost to defense stocks.