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Ahead of Wall Street

Tuesday, August 21, 2018

Pre-market futures are inching up again this morning, minus any major catalysts to direct positive or negative sentiment ahead of the opening bell today. The S&P 500 appears poised to close in on a fresh all-time high, following another strong quarterly earnings season and hopes that trade talks between the U.S. and China will amount to something positive. The S&P index closed a mere 15 points below its January all-time high Monday afternoon.

This is a particularly slow period for new economic data, so with a lack of news hitting the tape this morning and markets wafting higher, we obviously see our long-term bull run continue. On the horizon, however, we do see things like trade challenges potentially dampening our outlook, along with an historically tight job market grappling with a lack of skilled labor for open positions across a wide spectrum of industries, from high tech to low-level produce collection.

We also see higher inflation primed to assert itself in our current economic realities, from possible wage growth finally gaining traction in U.S. employment to real estate seemingly peaking at current levels as mortgages gradually continue to get more expensive. Much of this has to do with interest rates set by the Federal Reserve, which is currently congregating for its annual Jackson Hole meeting this week.

Fed Chair Jerome Powell is slated to speak on Friday to discuss interest rates — already expected to rise another 25 basis points to a 2.00-2.25 range in its September meeting — as well as things like global markets, the falling value of gold and whether or not a fourth rate hike can still be expected in December of this year. Powell may also field questions on criticisms he has received from President Trump about not keeping interest rates near historic lows for longer; he may also choose to sidestep such inquiries in favor of other issues.

Although Q2 earnings season is generally considered already in the books, we do see some companies reporting this morning:

Zacks Rank #2 (Buy)-rated Kohl’s Corp. KSS outperformed expectations on both top and bottom lines in its Q2 results, posting $1.76 per share versus the $1.65 expected on revenues of $4.57 billion which outperformed the Zacks consensus by 2.8%. However, shares are selling off more than 3% even though the retailer raised guidance for full-year earnings — but +5 cents guidance following an 11-cent beat looks a little light for a company up 45% year to date. For more on KSS’ earnings, click here.

National homebuilder Toll Brothers TOL impressed investors with its fiscal Q3 results before the opening bell today, beating on the top line by 5.5% on earnings of $1.26 per share, ahead of the $1.03 expected and the 87 cents a year ago. For an industry that’s seen hard times of late, this report shines like a beacon, especially considering TOL shares had fallen more than 25% year to date. The stock is up a robust 9% prior to today’s market open on the news. For more on TOL’s earnings, click here.

And Zacks Rank #2, Style Score A-rated TJX Companies TJX, the parent of TJ Maxx, Marshall’s and HomeGoods, put up a big beat on both top and bottom lines this morning, at $1.17 per share and $9.33 billion in sales, which easily topped the $1.05 and $9.02 billion, respectively. Comps of +6% in year over year revenues and guidance raised for the company has hiked shares in the pre-market, up more than 4% on its 17th-straight quarterly earnings beat. For more on TJX’s earnings, click here.

Mark Vickery
Senior Editor

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Earnings and Economic News

Key Earnings Reports For Aug 22, 2018

Economic Event Reported
(+) Treasury notes (10 yr) - Aug 22, 2018 4:15 PM Eastern Time
(+) Federal Funds Rate - Aug 22, 2018 4:15 PM Eastern Time
(+) Treasury bills (3 mth) - Aug 22, 2018 4:15 PM Eastern Time
(+) FOMC Minutes - Aug 22, 2018 --
(+) Existing Home Sales - Aug 22, 2018 --
(+) Crude Inventories - Aug 22, 2018 --