The following commentary originally was sent to Trifecta Stocks subscribers on April 8 at 4:47 p.m. ET.
While the stock market fluttered around this past week, it moved lower directionally throughout the week, with all three major market indices taking it on the chin. It wasn't a huge hit, but we'd have to say that April is not starting off the way March did.
Month to date, the S&P 500 is down roughly 0.8% amid a shift in the economic conversation following more negative revisions in March quarter GDP expectations by to the Atlanta Fed's GDPNow; it now puts the increase at just 0.4%. We also have renewed concern over consumers' appetite to spend following disappointing March same-store-sales reports from a number of retailers. And we're starting to hear negative earnings pre-announcements from companies such as Cree (CREE) and National Instrument (NATI)
Counterbalancing the negative, the market was aided by crude oil, which perked up a bit this week due to an unexpected drop in inventories reported for last week paired with another drop in the U.S. oil rig count. We're about one week away from the expected meeting between OPEC and non-OPEC producers, during which they could agree on production freezes. We expect to hear more on this next week, and depending on the outcome, we expect to see gasoline prices move in one direction or the other. If gas prices continue to move higher, we could hear retailers fire a warning shot across the bow over shrinking disposable income.
Turning our view to next week, it's the beginning of March quarter earnings as Alcoa (AA) once again officially kick-starts the season after Monday's market close. As we've mentioned in recent weeks, we're more than a tad concerned with earnings expectations for the S&P 500, particularly for the back half of 2016 relative to the first half, which means we'll be scrutinizing even more company commentary this earnings season. Companies to watch on the docket next week aside from Alcoa include CSX (CSX), Fastenal (FAST), JPMorgan Chase (JPM), Bank of America (BAC) and Citigroup (C). We'll also be checking out Pier One Imports (PIR) following this week's disappointing March same-store-sales reports from Gap (GPS), Buckle (BKE), Cato (CATO) and others.
We'll also be receiving a good amount of economic data, such as the March reports for Retail Sales, Industrial Production and the twin inflation gauges that are the Producer Price Index and Consumer Price Index. That data should help round out the March quarter economic picture. All in all, not quite the quieter week these last few days have been, but far from the frenzy that will take hold as we move deeper into March quarter earnings the week of April 18.