Market Preview: Market Bounces in Relief Rally, Earnings Next Week from BofA, Netflix and P&G


Markets took investors for a wild ride Friday bouncing hard after two days of intense selling, turning lower midday, and then closing strong into the close. An attack on the Fed by President Trump seemed to exacerbate market volatility Thursday, originally brought on by fears the Fed would proceed willy nilly into a rate raising plan regardless of economic impact. By the close Friday, markets seemed to have stabilized, at least for the moment, with the tech heavy Nasdaq leading the way up over 2%. One stabilizing factor may have been news the lines of communication may be about to open between the U.S. and China on the issue of tariffs. Chinese President Xi Jinping and President Trump plan to meet at the G20 summit next month in Buenos Aires.

Bank earnings continue Monday with Bank of America (BAC) reporting in the morning and First Defiance Financial Corp. (FDEF) reporting Monday afternoon. As with the other big banks, investors will be focused on what BAC perceives the impact of rising rates will be going into Q4 and 2019. The bank reported good trading numbers in the first half of 2018, but that is unlikely to persist. BAC stock broke through support levels around $28 on Friday before rallying to close just above those levels. Much smaller than BAC, First Defiance has not been spared by the market selloff. The stock is down over 13% this quarter headed into earnings.

Most investors will be holding their breath on Monday, to see if the market turns its focus away from interest rate concerns back to economic numbers. Manufacturing numbers have been good, and we’ll get the New York manufacturing survey Monday morning. The survey numbers have been rising steadily throughout 2018. Also on tap for Monday are retail sales numbers and business inventories. Excluding autos, retail sales are expected to be up .3% month-over-month. Tuesday we’ll get Redbook retail numbers, industrial production, and the housing market index. The index, which measures the demand for housing, has been in a steady decline all year. Wednesday investors will look through housing starts numbers and then spend the afternoon parsing through the Fed minutes from their last meeting. Jobless claims and the Philly Fed Business Outlook will be released Thursday, followed by existing homes sales numbers Friday.

Earnings kick into high gear on Tuesday, when Johnson and Johnson (JNJ), UnitedHealth (UNH) and Netflix (NFLX) report. Netflix, one of the FAANG stocks, is down close to 20% for the quarter, but is still up over 60% on the year. Wednesday Abbott Labs (ABT), U.S. Bancorp (USB) and Kinder Morgan (KMI) are slated to release. Investors will be looking to Kinder Morgan for guidance on the oil market, which declined along with the overall market this week. SAP (SAP), Paypal (PAY) and high flying Intuitive Surgical (ISRG) headline the earnings releases Thursday. Even after a dip in October, ISRG stock is up almost 40% in 2018. Finally, investors will close out the week on Friday with a smorgasbord of earnings from consumer staples giant Procter & Gamble (PG), Honeywell (HON) and Schlumberger (SLB), among many others.

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