As we shared last week with Tematica Research Members in our Tematica Investing report, the day to day movement in the market was predicated on the tone of corporate earnings reported the night before and early that day. The Friday before last, General Electric (GE), Proctor & Gamble (PG) and Honeywell (HON) weighed on the market. That same downward pressure continued on Monday following results from Whirlpool (WHR). On Tuesday, positive quarterly results from Caterpillar (CAT) and 3M (MMM) had the major market indices retracing their way higher only to see the S&P 500 and Nasdaq trade lower on Thursday. Following stellar earnings beats by Connected Society company Amazon (AMZN) and Asset-Lite company Alphabet (GOOGL), both of which are on the Tematica Investing Select List, all three major market indices moved higher on Friday.
If it weren’t for Friday’s pop in both the Nasdaq Composite Index and the S&P 500’s move higher on Friday as well, both of those indices would have closed last week in the red. What this tells us is the market is likely to be somewhat schizophrenic in the days ahead, reacting to the news of the day. With more than 2,000 companies reporting over the next 10 trading days, including a number of high profile companies like Apple (AAPL), Facebook (FB) and Starbucks (SBUX) to name a few, odds are we will see the market continue to move back and forth between losses and gains near-term.
Complicating matters somewhat, oil prices are trending higher, the US dollar is overbought and the Euro is oversold – generally speaking that sets up a weak pattern for U.S. equities. Also, too, the coming week will be an even busier one than last week, given the uptick in the number of corporate earnings reports and the beginning of October economic data. All this as we get ready to close the month of October, one that so far has been stronger than expected for the market.
Here’s what we’ll be watching over the next five trading days:
On the Economic Front
Following Friday’s initial 3Q 2017 GDP print of 3.0%, which was better than expected by many across Wall Street, all eyes will now begin to focus on the economy’s prospects for the current quarter. As this week progresses, we’ll begin to get the initial October data that will bring that GDP figure into focus, including the October ISM Manufacturing Report, October Auto & Truck Sales, and several employment reports including the one from the Bureau of Labor Statistics.
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