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On Your Marks for Q4 Earnings Season, Get Set...

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Monday, January 13, 2020

Another healthy jobs report from the Bureau of Labor Statistics (BLS) last Friday morning was not enough to stop a late-week sell-off from fresh all-time highs on the major U.S. indexes. A pending trade agreement (“phase one”) with China, scheduled for signing on Wednesday, and the avoidance of a hot war in the Middle East helped market participants restore positive sentiment last week, overall.

Pre-market traders appear in a buying mood to start the new week, with Dow futures +100, Nasdaq +38 and the S&P 500 +10 — all of which have in their sights further all-time market highs. This comes a day ahead of Q4 earnings reports, which begin en masse 24 hours from now, when big banks like JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) and Wells Fargo (WFC - Free Report) joining Delta Air Lines (DAL - Free Report) releases expected prior to the opening bell.

We don’t see any notable economic data reporting in today’s pre-market, but these will heat up this week as well: tomorrow brings us fresh Consumer Price Index (CPI) data for December, expected to be in-line with the previous month’s +0.3% headline (+0.2% on the core). This will be followed the following day by a new Producer Price Index (PPI) read for December, alongside a new Empire State Index (tracking productivity in the state of New York) and a government Beige Book release that afternoon.

The last time markets saw a meaningful decline on the indexes was just ahead of Q3 2019 earnings season, when fears of a slowing economy, due partly to a prolonged trade war with China, had market participants wary of trading going into calendar Q4. Those fears were somewhat misapplied: in that earnings season, while certainly cooling from quarters reported previously, we still saw industry strength in places like Technology. By the week of Halloween, we’ve been on a near straight diagonal line upward in all three major U.S. indexes, leading us to our near-all-time highs currently.

For a comprehensive look on earnings season — especially the upcoming Q4 earnings deluge — do not miss Zacks Director of Research Sheraz Mian’s Earnings Preview report from Friday: Can Earnings Reports Push Bank Stocks Even Higher?

Mark Vickery
Senior Editor

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