Breaking News
0

Earnings And The Fed Give Investors Little To Cheer About

By Peter C. KennyMarket OverviewApr 25, 2016 07:51AM ET
www.investing.com/analysis/earnings-and-the-fed-give-investors-little-to-cheer-about-200126325
Earnings And The Fed Give Investors Little To Cheer About
By Peter C. Kenny   |  Apr 25, 2016 07:51AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Last week's equity market performances were mixed, with the three major US market indices barely registering a move. The Nasdaq lost 0.65% while the Dow Industrials (+0.59%) and S&P 500 (+0.52%) managed fractionally positive weekly performances. The stall in equity market price appreciation we saw materialize last week speaks to investor caution ahead of this week's FOMC Meeting/Announcement, Bank of Japan Meeting and the richest valuations of the year to date for US equities.

Investor caution has been reflected in recent sessions by a slip in volume and by our range bound trade. However, last week several significant and potentially positive technical developments did materialize for investors. The Dow Industrials and nearly 30 S&P 500 component companies formed a golden cross, which should lead to some continuation in positive price action this week, though I suspect it may be modest and heavily influenced by the FOMC and earnings.

The principle headwind for markets last week was earnings, particularly for the Nasdaq. Both Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) reported earnings below consensus, and in the process weighed heavily on the technology sector and the broader Nasdaq index. Last week's price action in both names and in the technology/software space, broadly speaking, speaks to cash outflows and a decidedly less optimistic outlook from investors for the near term. This week we will hear from Apple (NASDAQ:AAPL) and social media icons Facebook (NASDAQ:FB), Twitter (NYSE:TWTR) and LinkedIn (NYSE:LNKD).

Just as financials provided a positive context for the equity markets and some subsequent lift in the first week of earnings season, technology shares weighed on the market last week. This week we will be hearing from the defense sector. Lockheed Martin (NYSE:LMT), Northrop Grumman (NYSE:NOC), General Dynamics (NYSE:GD) and Raytheon (NYSE:RTN) all report, as does Boeing (NYSE:BA).

Markets appear stretched while data continues to reflect a tepid economic environment. The backdrop continues to confirm for me that a bout of weakness is in the offing. Considering that US equity markets have barley moved on a year-over-year basis, that earnings season thus far has been mixed at best, despite lowered guidance, and that the S&P is trading at a P/E of over 17, I am struggling to see where the stimulus will come from for a meaningful breakout and charge higher from here. Even an accommodative message from the FOMC on Wednesday at 2:00, which I do expect, will likely bare little fruit for investors.

Earnings And The Fed Give Investors Little To Cheer About
 

Related Articles

Earnings And The Fed Give Investors Little To Cheer About

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email