U.S. markets finished mixed on Thursday with Energy stocks and Tech showing strength. The Nasdaq extended its win streak to 10-straight with the index setting another record high.
The S&P 500 and Russell 2000 also set lifetime highs, intraday, while the Dow lagged. The Financial sector was slightly weaker with a number of the big-cap banking stocks struggling to hold their 50-day moving averages.
Earnings Outlook-With results from 54 S&P 500 members already out, total earnings are up +11.9% from the same period last year on +5.5% higher revenues, with 79.6% beating EPS estimates and 72.2% beating revenue estimates.
For the S&P 500 Index as a whole, total Q2 earnings are expected to be up +7.2% from the same period last year on +4.5% higher revenues. Sectors with the strongest growth in Q2 include Energy, Technology, Aerospace, Construction, Finance, and Industrial Products. Q2 earnings growth for the index would fall to +4.9% on an ex-Energy basis.
For full-year 2017, total earnings for the index are expected to be up +7.7% on +4.0% higher revenues, which would follow +0.7% earnings growth on +2% higher revenues in 2016. Index earnings are expected to be up +11.4% in 2018 and +8.9% in 2019.
Global Economy –European markets closed slightly lower after coming under pressure on a higher euro. France’s CAC 40 index closed down 0.3%, while the DAX 30 index slipped 0.04%.
Spain’s IBEX 35 dipped 0.2%, and Italy’s FTSE MIB also fell 0.2%. The U.K.’s FTSE 100 gained 0.8%, as the pound fell 0.3455%.
The ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged.
Additionally, the central bank confirmed that its net asset purchases, at the current monthly pace of 60 billion euros, are intended to run until the end of December 2017, or beyond, if necessary.
Asian markets ended higher after Japan’s central bank raised its economic assessment for the country, saying it was expanding moderately, while it upgraded the growth projection for the year ending March 2018 to 1.8% from 1.6%.
Additionally, the BOJ now expects inflation to reach around 2% in the year ending March 2020, a year later than its previous projection.
The Nikkei Stock Average’s rose 0.6% while Hong Kong’s Hang Seng Index added 0.3%. The Shanghai Composite Index gained 0.4% and Korea’s Kospi advanced 0.5%.
U.S. Economy-Jobless Claims came in at 233,000 versus consensus for 246,000 for the week ending 7/15.
The July Philly Fed manufacturing index slid 8.1 points to 19.5 in July, weaker than expectations of 22.0.
The Bloomberg Consumer Comfort Index Level checked in at 47.6 for the week ending 7/16.
The leading economic index rose 0.6% to 127.8 in June.
Market Sentiment –The iShares 20+ Year Treasury Bond ETF (TLT) traded in positive territory throughout the session while reaching a peak of $125.73.
Lower resistance at $125-$125.25 held into the closing bell with additional hurdles at $126-$128 on continued closes above the latter. Support remains at $124.25-$124 and the 50-day moving average.
Market Analysis-The S&P 500 closed slightly lower but has traded higher in six of the past eight sessions. Today’s all-time high reached 2,477 with fresh resistance at 2,500-2,525 on continued closes above 2,475.
Short-term support is at 2,460-2,450 with a move below the latter a bearish development.
The Spiders S&P 500 ETF (SPY) tapped a record high of $247.48 with new resistance at $248-$250 on continued closes above the $247.50 level.
Rising support is at $246-$245. A close below the latter could lead to a retest to $242-$241.75 and the 50-day moving average.
The Spider S&P Energy Select Sector (XLE) is showing signs of a recent bottoming process after holding support at $64-$63.50 since early June.
Current support is at $65.75-$65.50 and the 50-day moving average. Today’s high tapped $66.57 with near-term resistance at $67-$67.25 and the 100-day moving average on continued momentum.
All the best,