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Markets: In spite of a rise in crude oil, it was a down market this week, with volatile currency moves – the pound fell over -4% vs. the USD in one week, which is a huge move for a currency, as the pound hit a multi-decade low. Small caps fell the most, dropping over -1%, as investors became risk-averse. This makes sense – we are in October – the worst month for stock performance, with a US election looming and creating uncertainty for the market.
The Non-Farm Payrolls report also created unrest in the market – even though the September numbers were lower, they were in line with Fed expectations, and fanned rate hike fears, causing rate-sensitive stocks, such as utilities, to decline. The 3-month average for job creation is 192K/month. Fourteen of 15 primary dealers that do business directly with the Fed, responded yes to a poll querying a rate hike at the U.S. central bank’s December meeting.
Dividend Stocks Update: These high dividend stocks go ex-dividend this coming week: Harvest Capital Credit Corporation (NASDAQ:HCAP), ARMOUR Residential REIT Inc (NYSE:ARR), Consolidated Communications (NASDAQ:CNSL), KCAP Financial Inc (NASDAQ:KCAP), Manning & Napier Inc (NYSE:MN), Five Oaks Invst (NYSE:OAKS).
Volatility: The VIX rose 1.4% this week, finishing at $13.48.
Currency: The dollar rose vs. most other major currencies this week.
Market Breadth: 12 of the Dow 30 stocks rose this week, vs. 13 last week. 36% of the S&P 500 rose this week, vs. 56% last week.
US Economic News: Sept. Non-Farm Payrolls came in below expectations, at 156K, vs. the 176K forecast. The Unemployment Rate inched up, to 5%. ISM Services jumped to 57.1 in Sept., far above forecasts.
Week Ahead Highlights: The Q3 earnings report season kicks off next week, with several airlines reporting, such as American Airlines Group (NASDAQ:AAL) and Delta Air Lines Inc (NYSE:DAL), and also several banks reporting – Citibank, JPMorgan Chase & Co (NYSE:JPM), and Wells Fargo (NYSE:WFC). On Sunday night, the second of three presidential debates will air.
While analysts expect third-quarter earnings will show a 0.7 percent decline from a year ago, that number is likely to move to the plus side based on the typically high percentage of companies that surpass analysts’ profit expectations, Thomson Reuters data shows.
From the start of an earnings season to the end, the S&P 500 earnings forecast has had a median gain of 3.4 percentage points since 2002, the data shows. If that’s the case this time around, third-quarter S&P 500 earnings could end up with growth of about 2.7 percent, which would be biggest increase since the last quarter of 2014. (Source: Reuters)
Sectors & Futures: Financials led, with Utilities trailing.
Natural gas led this week, as precious metals plummeted::
