Corporate Earnings Continue to Rise
Sources: Sources for data in tables: Equity Market and Fixed Income returns are from JP Morgan as of 04/20/18. Rates and Economic Calendar Data from Bloomberg as of 04/24/18. International developed markets measured by the MSCI EAFE Index, emerging markets measured by the MSCI EM Index. Sector performance is measured using GICS methodology.
Stocks were able to finish in positive territory last week despite giving back some of the gains earned earlier in the week. In the U.S., the S&P 500 Index improved 0.54% and the Dow Jones Industrial Average gained 0.46%, while the smaller cap Russell 2000 Index outpaced both of its larger counterparts advancing 0.96%. The late week decline may be attributed to investors weighing the incoming corporate earnings releases versus the potential for rising interest rates fueled by positive economic data and slightly hawkish commentary from the Federal Reserve. Speaking of interest rates, the yield on the 10 Year U.S. Treasury finished the week at 2.96% and even breached the 3% mark on Tuesday, a level not seen since 2014.
Investors, and market strategists, now appear to be focusing much of their attention to corporate earnings season. While a broad range of economic and geopolitical factors still exist, such as inflation worries and trade disputes, which may pose a risk to a rise in the equity markets, we are still optimistic that earnings growth and economic expansion will fuel upside stock price potential in the days and months ahead. At the time of this writing, approximately 20% of companies have reported and 81% of those companies have beat analyst estimates. According to Thompson Reuters, if that pace is sustained, it would be the best quarter for U.S. corporate reporting since 1994. The earnings calendar is packed full this week and although there are a number of companies yet to report, including many of the big names in Information Technology such as Apple, Microsoft, and Facebook, investors should be encouraged by the results thus far in this earnings season.
Despite our belief that certain stocks within certain sectors, industries, and geographies will push higher in 2018, we also stress the importance of a well-diversified, global portfolio in line with an investor’s risk/reward tolerance to help protect against potential volatility, as we saw during the 1st quarter of 2018, along the way. If you would like to know how we are helping clients navigate this market environment, or to simply have a comprehensive review completed on your current portfolio, please do not hesitate to speak with your Hennion & Walsh Financial Advisor or a member of the Hennion & Walsh Asset Management Team.
Disclosures: Past performance does not guarantee future results. We have taken this information from sources that we believe to be reliable and accurate. Hennion & Walsh cannot guarantee the accuracy of said information and cannot be held liable. This information is provided for informational purposes only and is not a solicitation to buy or sell any of the asset classes or sectors discussed.
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