Summary:
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US indices trading slightly lower to start the week
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Q1 US earnings tipped for first decline in 3 years
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FANG+ (USFANG on xStation) to launch this afternoon
The last week was another good one for US stock markets with all major indices posting steady gains after receiving a further boost from a dovish shift from the Fed. Friday saw a second consecutive stellar NFP report, with over 300k jobs added in January and while the markets briefly popped to their highest level in 7 weeks, the gains were pared back a little with the US500 actually ending a little lower on the day. The returns seen last month meant that it was the best start to the year for US stocks on the whole in over 30 years as you have to go back to 1987 to find a better performance for the month of January.
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The US500 enjoyed a great month in January and recent developments from the Fed and NFP last week seem to support further gains. Having said that, Friday’s trade showed a lower close and a doi candle and the market does remain below its 200 day SMA. Source: xStation
Earnings season stateside is now in full swing with several of the largest firms including Apple, Amazon and Facebook already reporting their latest results. On the whole the figures have been mildly pleasing with most beating forecasts, although this could well be due more to pessimistic expectations rather than strong performance. Wall Street analysts have slashed their estimates for US corporate earnings in Q1 and are predicting the first year-on-year decline in almost three years.
Consensus estimates point to a 0.8% fall for earnings per share (EPS) this quarter, according to FactSet, a fairly strong decline from a forecast 3.3% growth at the end of December. This would be the first such contraction since the second quarter of 2016. With about half of the companies in the S&P 500 (US500 on xStation) having reported their results, earnings for the fourth quarter rose 12.4%. But this is largely due to corporate tax which boosted profitability last year and thus will set up less flattering comparisons for 2019. The main focus for earnings today will fall on Alphabet, with results scheduled to be released after the close. Q4 revenue is expected to jump 21% to $31.3B and with the ad revenue growth slowing less than feared for Facebook, in what some see a as sign for cautious optimism.
Alphabet, Facebook and 8 others stocks make up the FANG+ index (USFANG on xStatioN) and this market is going live and available to trade for the first time this afternoon. To read more about this please visit here.
