We are now one trading day away from putting April in the rear-view mirror. The last few weeks have seen the market's three major indices vacillating, leaving them modestly in positive territory for the month. That's different than the negative returns from the S&P 500 and Dow Jones Industrial Average during the first quarter, but we still have another few weeks of earnings results.
So far, this earnings season is quite different than the post-tax reform, slam-dunk one that many had expected. At the same time, inflationary comments have helped push 10-year Treasuries to the 3.0% mark, well above the near 2.75% level in early April. That climb, as well as the reasons behind it, is giving way to chatter over a Fed that may need to step up either the frequency or magnitude of its expected rate hikes this year -- yet another factor that kept stocks largely in check last week.
As of Monday, we will be one-third of the way through the current quarter. This means, the avalanche of economic data for the second quarter will begin, and investors will be parsing and comparing it to the initial first-quarter GDP print of 2.3%.
As of April 20, the New York Fed's Nowcasting Report is looking for second-quarter GDP growth of 3.03%... but then again it also expected first-quarter GDP to be 2.9% as of that date as well. Let's also remember that first-quarter figure, while a beat relative to the 1.8%-2.0% forecasts for the quarter, was far lower than the initial forecasts that were put forth back in February. We mention this because we're apt to see this again as economists and analysts formulate and refine their views on the current quarter. The question is, will we have upward or downward revisions? Time and the data will tell, and it all begins Monday.
The usual end-of-the-month, start-of-the-month data are on tap this week -- Personal Income & Spending (March), ISM Index (April), Construction Spending (March), Auto & Truck Sales (April), Factory Orders (March), ISM Services (April) and the Employment Report (April). What makes this data stream a little more interesting, however, is the Fed's next FOMC rate decision lands during all of this. That's right, Wednesday, May 2, is the day.
Earnings on Tap
If you thought last week was busy, hang onto your hats because this week has more than 1,000 companies issuing quarterly results and updating their outlooks. As we've seen over the last two weeks, these reports carry weight in the market. It's going to be a barn burner of earnings.
Here are the reports that we'll be watching:
-- Monday: McDonald's (MCD) , U.S .Concrete (USCR)
-- Tuesday: Apple (AAPL) , Cummins (CMI) , Eaton (ETN) , Emerson (EMR) , Shopify (SHOP) , Mondelez International (MDLZ) , Snap (SNAP) , Yum China (YUMC)
-- Wednesday: American Water Works (AWK) , Cirrus Logic (CRUS) , Equinix (EQIX) , Estee Lauder (EL) , Habit Restaurants (HABT) , MasterCard (MA) , Qorvo (QRVO) , Spotify (SPOT) , Tesla (TSLA) , Yum! Brands (YUM) , Skyworks (SWKS)
-- Thursday: Blue Apron (APRN) , Cott (COT) , Ferrari (RACE) , Vulcan Materials (VMC) , Alarm.com (ALRM) , Insulet (PODD)
-- Friday: Alibaba (BABA) , American Axle (AXL) , Physician's Realty Trust (DOC)
As you can see, there will be no shortage of data and earnings arriving, and the combination of this week and next means the majority of S&P 500 companies will have reported. What these reports reveal, as well as the Fed, will set the stage for how the second month of the quarter begins.
While the CNNMoney Fear & Greed Index rallied to a reading of 41 Friday, up from 32 last week, it's still registering "Fear," so expect the "shoot first, ask questions" later attitude to continue as we say goodbye to April and hello to May.
This commentary is an excerpt from the Trifecta Stocks Weekly Roundup sent to subscribers on Friday, April 27. Click here to learn more about this portfolio, trading ideas and market commentary product.
-- Bob Lang and Chris Versace are co-portfolio managers of Trifecta Stocks.
