Last week, all three of the major indices posted their first four-day winning streak since August. Both the Dow (^DJI) and S&P 500 (^GSPC) closed the week 2% higher. According to Bespoke, this is the best start to a year for the S&P 500 since 1987.
So far, about 13% of the S&P 500’s market cap has reported Q4 earnings. “Earnings are beating by 1.7%, with 70% of companies exceeding their bottom-line estimates. This compares to 4.9% and 70% over the past 3 years,” Jonathan Golub, Credit Suisse’s chief U.S. equity strategist, said in a note Friday.
Next week, markets will be closed on Monday, January 21 in observance of Martin Luther King Jr.’s birthday and will reopen for trading on Tuesday, January 22.
World leaders will gather at the annual World Economic Forum (WEF) meeting in Davos, Switzerland on Tuesday, January 22 to Friday, January 25. The sharpest cultural, business and political minds will meet to discuss this year’s theme of “Globalization 4.0: Shaping a New Architecture in the Age of the Fourth Industrial Revolution.” President Trump was originally scheduled to attend Davos but canceled his trip and also canceled the White House delegation’s trip.
For complete coverage of the four-day event, visit Yahoo Finance’s Davos 2019 page.
Additionally, on Saturday afternoon President Trump proposed a plan to Congress to compromise on the border wall and end the government shutdown. Some of the proposed plan included $800 million in urgent humanitarian assistance, $805 million for drug detection technology, 2,750 border agents and law enforcement officials and 75 new immigration judge teams to reduce court backlog of 900,000 cases.
The president also claimed that Senator Mitch McConnell will put the plan on the Senate floor this week.
As the partial government shutdown enters week five, economists officially began to worry. Many economists had largely shrugged off the economic impact of the shutdown until just this week.
“We have long argued that, rather than trade policy, an extended Federal government shutdown would be the key downside risk to the economy this year. Sure enough, the current stand-off is already the longest on record and is prompting many forecasters to slash their estimates for first-quarter GDP growth,” Capital Economics said in a note Friday.
Brett Ryan, senior U.S. economist at Deutsche Bank, estimated that the actual hit to Q4 GDP could be around 0.2% to 0.3%.
Furthermore, the continued government shutdown has tampered with the released of key economic data. Q4 GDP data is scheduled to be released at the end of this month; however, HSBC estimated that the release will likely be pushed back. “The Census Bureau and the Bureau of Economic Analysis are likely to issue updated release schedules for these reports only after the shutdown has ended,” the firm wrote in a note to clients on Thursday.
Week two of earnings season will kick off on Tuesday with some big companies releasing their Q4 financial results. The biggest names reporting next week are as follows:
Wednesday: Abbott Laboratories (ABT), Comcast (CMCSA), Kimberly-Clark (KMB), Procter & Gamble (PG), United Technologies (UTX) before market open; Canadian Pacific Railway (CP), Ford (F), Las Vegas Sands (LVS), Texas Instruments (TXN), United Rentals (URI) after market close
Thursday: American Airlines (AAL), Bristol-Myers Squibb (BMY), Freeport-McMoran (FCX), Jetblue Airways (JBLU), Union Pacific (UNP) before market open; Alaska Air (ALK), Discover Financials (DFS), E*TRADE Financial (ETFC), Intel (INTC), Norfolk Southern (NSC), Starbucks (SBUX), Western Digital (WDC) after market close
Monday: Markets will be closed in observance of Martin Luther King Jr.’s birthday
Tuesday: Existing Home Sales, December (5.24 million expected, 5.32 million prior)
Wednesday: MBA Mortgage Applications, week ending January 18 (+13.5% prior); FHFA House Price Index month-on-month, November (+0.3% expected, +0.3% prior); Richmond Fed Manufacturing Index, January (-3 expected, -8 prior)
Thursday: Initial Jobless Claims, week ending January 19 (215,000 expected, 213,000 prior); Continuing Claims, week ending January 12 (1.737 million prior); Bloomberg Consumer Comfort, week ending January 20 (58.1 prior); Markit US Composite PMI, January (54.4 prior); Markit US Manufacturing PMI, January (53.5 expected, 53.8 prior); Markit US Services PMI, January (54.0 expected, 54.4 prior); Leading Index, December (-0.1% expected, +0.2% prior); Wholesale Inventories month-on-month, November
Friday: Durable Goods Order, December (+1.5% expected); Durables excluding transportation, December (0.0% expected); New Home Sales, December (554,000 expected)
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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