Schwab Market Update
Posted: 8/18/2017 9:00 AM ET
U.S. stocks are poised to rebound slightly in early action from yesterday's drop that came courtesy of heightened concerns about the festering dysfunction in the White House and monetary policy uncertainty, as well as elevated geopolitical concerns, exacerbated by yesterday's terror attack in Spain. Asia finished mostly lower and Europe is dropping broadly as risk aversion flared up. Treasury yields are little changed and the U.S. dollar is dipping, while gold and crude oil prices are higher. The retail sector continues to be hampered, with Foot Locker's disappointing quarterly results supplying today's pressure.
As of 8:55 a.m. ET, the September S&P 500 Index future is 2 points above fair value, the DJIA future is 10 points above fair value, and Nasdaq 100 Index future is 20 points north of fair value. WTI crude oil is increasing $0.06 to $47.15 per barrel and Brent crude oil is ticking $0.01 higher to $51.04 per barrel. The Bloomberg gold spot price is advancing $7.91 at $1,296.05 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—is dipping 0.1% to 93.52.
Deere & Co. (DE $124) reported fiscal Q3 earnings-per-share (EPS) of $1.97, above the $1.93 FactSet estimate, as net sales of equipment grew 16.6% year-over-year (y/y) to $6.8 billion, just shy of the projected $6.9 billion.
Foot Locker Inc. (FL $48) posted Q2 profits of $0.39 per share, or $0.62 ex-items, versus the expected $0.90, as revenues decreased 4.4% y/y to $1.7 billion, south of the forecasted $1.8 billion. Q2 same-store sales fell 6.0% y/y, compared to the expected 0.8% gain.
Gap Inc. (GPS $23) announced Q2 EPS of $0.68, or $0.58 ex-items, compared to the forecasted $0.52, on previously reported revenues of $3.8 billion. Q2 same-store sales grew 1.0% y/y, versus the estimated 0.1% increase. GPS raised its full-year EPS outlook.
Consumer sentiment report due out after the opening bell
Treasuries are little changed with the economic calendar void of any major releases before the opening bell. The yield on the 2-year note is ticking 1 basis point higher to 1.30%, while the yields on the 10-year note and the 30-year bond are flat at 2.18% and 2.77%, respectively.
Treasury yields have been jittery and the U.S. Dollar Index has shown some signs of gaining traction with economic data relatively upbeat, but being met with persistent low inflation, while monetary policy uncertainty regarding the Fed and European Central Bank (ECB) have flared-up. Moreover, global sentiment recovered this week, after being stymied the week prior, as tensions between North Korea and U.S. appeared to fade.
Schwab's Chief Investment Strategist Liz Ann Sonders notes in her latest article, Twist and Shout: United States Takes on North Korea … Implications for Stocks we don't believe significant military escalation is the likely outcome of the battle of wills between President Trump and North Korea’s Kim Jong Un. But it is a year ending in "7" and there are other forces at work which could keep stocks in a choppy pattern for the next couple of months. Read more on the Markets & Economy page at www.schwab.com and follow Liz Ann on Twitter: @lizannsonders.
Later this morning, the economic docket will bring the release of the August preliminary University of Michigan Consumer Sentiment Index, projected to tick higher to 94.0 from July's 93.4 level. Schwab's Director of Market and Sector Analysis, Brad Sorensen, CFA, notes in his latest Schwab Sector Views: What Makes the World Go Around?, the industrial sector is often overlooked but is at the center of much of what occurs in the global economy. Brad adds that high consumer confidence could help industrials, along with improving global growth and a solid U.S. economy. However, the diversity of the group and monetary and fiscal uncertainty keep us from upgrading the sector … for now. Read more on the Markets & Economy page at www.schwab.com and follow us on Twitter: @schwabresearch.
Europe broadly lower as risk appetites shrink amid heightened global concerns
European equities are seeing widespread losses in afternoon action, following yesterday's solid decline in the U.S. that accelerated late in the session. Risk aversion is ramping back up as the exacerbated political dysfunction in the U.S. is fostering concerns and the terror attack in Spain are further weighing on sentiment. These add to already elevated geopolitical concerns on the heels of the recently ramped up concerns toward North Korea, along with flared-up monetary policy uncertainty toward the ECB and Fed, ahead of next week's key Fed symposium in Jackson Hole, Wyoming, at which the heads of both central banks are set to speak. Travel and leisure issues are leading the broad-based decline following the terror attack in Spain. The euro and the British pound are nudging higher, while bond yields in the region are lower. In economic news, eurozone construction output declined in June.
Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA points out in his article, What are fund flows telling us about trends and risks in the global stock market?, that the money coming into ETFs is flowing into a broad range of stock markets featuring a preference for international stocks and revealing a surprising disconnect with the performance and geopolitical risk of the underlying markets. Read more on the Markets & Economy page at www.schwab.com and follow Jeff on Twitter: @jeffreykleintop.
The U.K. FTSE 100 Index is down 0.9%, France's CAC-40 Index is dropping 1.0%, Germany's DAX Index and Italy's FTSE MIB Index are declining 0.3%, while Switzerland's Swiss Market Index and Spain's IBEX 35 Index are trading 0.8% to the downside.
Asia mostly lower as plethora of concerns linger
Stocks in Asia finished mostly lower on the heels of the drop in the U.S. yesterday, as the global markets rein in risk appetites in the face of political dysfunction in the U.S., along with Fed and ECB monetary policy uncertainty, while geopolitical concerns linger in the wake of the terror attack in Spain and amid the recently flare-up tensions between the U.S. and North Korea. Japan's Nikkei 225 Index fell 1.2%, with the yen rallying on the heightened risk aversion, while Australia's S&P/ASX 200 Index decreased 0.6%. The Hong Kong Hang Seng Index dropped 1.1%, India's S&P BSE Sensex 30 Index declined 0.9% and South Korea's Kospi Index dipped 0.1%, remaining near all-time highs despite the North Korean uneasiness. However, China's Shanghai Composite Index finished flat. Amid this backdrop, Schwab's Jeffrey Kleintop, CFA, offers his articles, Missiles and Markets: An investor guide to geopolitical risks and The Long Period of Underperformance for Emerging Market Stocks May Finally Be Over on the International Investing page at www.schwab.com.
Schwab Center for Financial Research - Market Analysis Group
©2017 Charles Schwab & Co., Inc., Member SIPC. All rights reserved.
Schwab Center for Financial Research ("SCFR") is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.
1 - IB1
Schwab or its affiliates has managed or co-managed a public offering of securities for this company in the past 12 months.
2 - SO2
Schwab and/or its officers own options, rights or warrants to purchase the securities of this company.
(0817-77B9)
Stocks Trying to Recover
U.S. stocks are poised to rebound slightly in early action from yesterday's drop that came courtesy of heightened concerns about the festering dysfunction in the White House and monetary policy uncertainty, as well as elevated geopolitical concerns, exacerbated by yesterday's terror attack in Spain. Asia finished mostly lower and Europe is dropping broadly as risk aversion flared up. Treasury yields are little changed and the U.S. dollar is dipping, while gold and crude oil prices are higher. The retail sector continues to be hampered, with Foot Locker's disappointing quarterly results supplying today's pressure.
As of 8:55 a.m. ET, the September S&P 500 Index future is 2 points above fair value, the DJIA future is 10 points above fair value, and Nasdaq 100 Index future is 20 points north of fair value. WTI crude oil is increasing $0.06 to $47.15 per barrel and Brent crude oil is ticking $0.01 higher to $51.04 per barrel. The Bloomberg gold spot price is advancing $7.91 at $1,296.05 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—is dipping 0.1% to 93.52.
Deere & Co. (DE $124) reported fiscal Q3 earnings-per-share (EPS) of $1.97, above the $1.93 FactSet estimate, as net sales of equipment grew 16.6% year-over-year (y/y) to $6.8 billion, just shy of the projected $6.9 billion.
Foot Locker Inc. (FL $48) posted Q2 profits of $0.39 per share, or $0.62 ex-items, versus the expected $0.90, as revenues decreased 4.4% y/y to $1.7 billion, south of the forecasted $1.8 billion. Q2 same-store sales fell 6.0% y/y, compared to the expected 0.8% gain.
Gap Inc. (GPS $23) announced Q2 EPS of $0.68, or $0.58 ex-items, compared to the forecasted $0.52, on previously reported revenues of $3.8 billion. Q2 same-store sales grew 1.0% y/y, versus the estimated 0.1% increase. GPS raised its full-year EPS outlook.
Consumer sentiment report due out after the opening bell
Treasuries are little changed with the economic calendar void of any major releases before the opening bell. The yield on the 2-year note is ticking 1 basis point higher to 1.30%, while the yields on the 10-year note and the 30-year bond are flat at 2.18% and 2.77%, respectively.
Treasury yields have been jittery and the U.S. Dollar Index has shown some signs of gaining traction with economic data relatively upbeat, but being met with persistent low inflation, while monetary policy uncertainty regarding the Fed and European Central Bank (ECB) have flared-up. Moreover, global sentiment recovered this week, after being stymied the week prior, as tensions between North Korea and U.S. appeared to fade.
Schwab's Chief Investment Strategist Liz Ann Sonders notes in her latest article, Twist and Shout: United States Takes on North Korea … Implications for Stocks we don't believe significant military escalation is the likely outcome of the battle of wills between President Trump and North Korea’s Kim Jong Un. But it is a year ending in "7" and there are other forces at work which could keep stocks in a choppy pattern for the next couple of months. Read more on the Markets & Economy page at www.schwab.com and follow Liz Ann on Twitter: @lizannsonders.
Later this morning, the economic docket will bring the release of the August preliminary University of Michigan Consumer Sentiment Index, projected to tick higher to 94.0 from July's 93.4 level. Schwab's Director of Market and Sector Analysis, Brad Sorensen, CFA, notes in his latest Schwab Sector Views: What Makes the World Go Around?, the industrial sector is often overlooked but is at the center of much of what occurs in the global economy. Brad adds that high consumer confidence could help industrials, along with improving global growth and a solid U.S. economy. However, the diversity of the group and monetary and fiscal uncertainty keep us from upgrading the sector … for now. Read more on the Markets & Economy page at www.schwab.com and follow us on Twitter: @schwabresearch.
Europe broadly lower as risk appetites shrink amid heightened global concerns
European equities are seeing widespread losses in afternoon action, following yesterday's solid decline in the U.S. that accelerated late in the session. Risk aversion is ramping back up as the exacerbated political dysfunction in the U.S. is fostering concerns and the terror attack in Spain are further weighing on sentiment. These add to already elevated geopolitical concerns on the heels of the recently ramped up concerns toward North Korea, along with flared-up monetary policy uncertainty toward the ECB and Fed, ahead of next week's key Fed symposium in Jackson Hole, Wyoming, at which the heads of both central banks are set to speak. Travel and leisure issues are leading the broad-based decline following the terror attack in Spain. The euro and the British pound are nudging higher, while bond yields in the region are lower. In economic news, eurozone construction output declined in June.
Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA points out in his article, What are fund flows telling us about trends and risks in the global stock market?, that the money coming into ETFs is flowing into a broad range of stock markets featuring a preference for international stocks and revealing a surprising disconnect with the performance and geopolitical risk of the underlying markets. Read more on the Markets & Economy page at www.schwab.com and follow Jeff on Twitter: @jeffreykleintop.
The U.K. FTSE 100 Index is down 0.9%, France's CAC-40 Index is dropping 1.0%, Germany's DAX Index and Italy's FTSE MIB Index are declining 0.3%, while Switzerland's Swiss Market Index and Spain's IBEX 35 Index are trading 0.8% to the downside.
Asia mostly lower as plethora of concerns linger
Stocks in Asia finished mostly lower on the heels of the drop in the U.S. yesterday, as the global markets rein in risk appetites in the face of political dysfunction in the U.S., along with Fed and ECB monetary policy uncertainty, while geopolitical concerns linger in the wake of the terror attack in Spain and amid the recently flare-up tensions between the U.S. and North Korea. Japan's Nikkei 225 Index fell 1.2%, with the yen rallying on the heightened risk aversion, while Australia's S&P/ASX 200 Index decreased 0.6%. The Hong Kong Hang Seng Index dropped 1.1%, India's S&P BSE Sensex 30 Index declined 0.9% and South Korea's Kospi Index dipped 0.1%, remaining near all-time highs despite the North Korean uneasiness. However, China's Shanghai Composite Index finished flat. Amid this backdrop, Schwab's Jeffrey Kleintop, CFA, offers his articles, Missiles and Markets: An investor guide to geopolitical risks and The Long Period of Underperformance for Emerging Market Stocks May Finally Be Over on the International Investing page at www.schwab.com.
Schwab Center for Financial Research - Market Analysis Group
©2017 Charles Schwab & Co., Inc., Member SIPC. All rights reserved.
Schwab Center for Financial Research ("SCFR") is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.
1 - IB1
Schwab or its affiliates has managed or co-managed a public offering of securities for this company in the past 12 months.
2 - SO2
Schwab and/or its officers own options, rights or warrants to purchase the securities of this company.
(0817-77B9)