Market Preview: Markets Rise and Fall on Trade Comments

Markets traded Friday as if the White House and its inhabitants were engaged in the children’s game of telephone. Pre-market reports from Bloomberg that President Trump had directed White House staff to draw up a trade agreement with China saw DJIA futures sprint over 300 points to the plus side. After a CNBC reporter played part of his interview with White House Economic Advisor Larry Kudlow, stating a deal was not in the works but could happen at some point, futures fell quickly to up only 200 points. The release of the jobless number, which came in at a red hot 250,000, buoyed the futures market until investors realized the numbers gave the Fed more ammo to raise rates. Markets opened positive and then sold off as Apple (AAPL) earnings weighed especially heavy on tech. But, late in the afternoon markets rallied to pare losses as President Trump said a trade deal with China was closer. Investors can take one lesson from market movements on the first Friday of November, volatility appears to be here to stay for the foreseeable future.

Monday analysts will parse earnings from Occidental Petroleum (OXY), Marriott (MAR) and Sysco (SYY). Oil continued to slide Friday, but an Exxon Mobil (XOM) earnings beat kept the stock in positive territory. Investors will be anxious to see whether Occidental can match the good news out of Exxon and halt the damage in the stock inflicted over the past few weeks. Marriott beat and raised earnings estimates for the year last quarter, but currency headwinds may be taking a toll on the company as 2018 has marched on. Analysts will be looking for continued strong growth in the Starwood brand, which Marriott acquired in 2016.

In addition to earnings, economic numbers released on Monday will include PMI services data and the ISM non-manufacturing index. The ISM index came in at 61.6 for September. Any number above 50 indicates growth in the index components which include services, construction, and mining among others. Tuesday investors will see the release of weekly Redbook retail numbers as well as the Labor Department’s job openings data. Wednesday begins a two day Federal Open Market Committee meeting, but no action on rates is expected from the Fed until December. Even so, the Fed statement to be released Thursday afternoon may rattle markets. Wednesday morning mortgage application numbers will be released followed by jobless claims on Thursday. Friday we’ll digest the Producer Price Index for October, which is expected to rise .2%. Also released Friday will be consumer sentiment and wholesale trade numbers.

As we are in the heart of earnings season, several large names report next week. Tuesday Eli Lilly (LLY) and CVS Health Corp. (CVS) are scheduled to report. Wednesday Qualcomm (QCOM), Twenty-First Century Fox (FOXA) and Prudential Financial (PRU) will all release earnings. Qualcomm was recently downgraded by BofA citing a lack of opportunity to cut costs and softening smartphone demand. Disney (DIS), Astrazeneca (AZN) and Activision Blizzard (ATVI) release numbers on Thursday. Call of Duty 4, recently released by Activision, has broken sales records for the franchise, but the stock was not spared in the recent market selloff. GNC Holdings (GNC) and Potbelly (PBPB) close out the week with earnings on Friday.    

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