On Your Marks For Q4 Earnings Season, Get Set...

Monday, January 13, 2020

Another healthy jobs report from the Bureau of Labor Statistics (BLS) last Friday morning was not enough to stop a late-week sell-off from fresh all-time highs on the major U.S. indexes. A pending trade agreement (“phase one”) with China, scheduled for signing on Wednesday, and the avoidance of a hot war in the Middle East helped market participants restore positive sentiment last week, overall.

Pre-market traders appear in a buying mood to start the new week, with Dow futures +100, Nasdaq +38 and the S&P 500 +10 — all of which have in their sights further all-time market highs. This comes a day ahead of Q4 earnings reports, which begin en masse 24 hours from now, when big banks like JPMorgan (NYSE:JPM) , Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) joining Delta Air Lines (NYSE:DAL) releases expected prior to the opening bell.

We don’t see any notable economic data reporting in today’s pre-market, but these will heat up this week as well: tomorrow brings us fresh Consumer Price Index (CPI) data for December, expected to be in-line with the previous month’s +0.3% headline (+0.2% on the core). This will be followed the following day by a new Producer Price Index (PPI) read for December, alongside a new Empire State Index (tracking productivity in the state of New York) and a government Beige Book release that afternoon.

The last time markets saw a meaningful decline on the indexes was just ahead of Q3 2019 earnings season, when fears of a slowing economy, due partly to a prolonged trade war with China, had market participants wary of trading going into calendar Q4. Those fears were somewhat misapplied: in that earnings season, while certainly cooling from quarters reported previously, we still saw industry strength in places like Technology. By the week of Halloween, we’ve been on a near straight diagonal line upward in all three major U.S. indexes, leading us to our near-all-time highs currently.

For a comprehensive look on earnings season — especially the upcoming Q4 earnings deluge — do not miss Zacks Director of Research Sheraz Mian’s Earnings Preview report from Friday: Can Earnings Reports Push Bank Stocks Even Higher?

Mark Vickery
Senior Editor

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