Market Preview: Markets Relatively Calm with Tech Still Under Pressure, Earnings from Eli Lilly and CVS


While tech, especially Apple (AAPL), continued to weigh on the Nasdaq Monday, the S&P 500 and DJIA attempted to repair some of the damage done in recent weeks by putting in slow, steady gains. The S&P ended up just over a half percent and the DJIA closed up .76%. News that Warren Buffett had increased Berkshire Hathaway purchases, both of its own stock as well as its other holdings, helped buoy the market. Announcements of insider buying at IBM and GE also helped soothe investor nerves. This, combined with better than expected non-manufacturing ISM numbers to start the first full week of November off on a mixed note. A lack of negative news on the tariff front did not hurt either, as hope begins to bloom that some positive progress will emerge out of a possible meeting between Trump and Xi at a G20 meeting later this month. Tuesday investors will head to the polls, but voting should have little impact on the markets until results are in for the Wednesday session.

Tomorrow earnings will roll in from Eli Lilly (LLY) and CVS Health Corp. (CVS). Eli Lilly CEO David Ricks has the company in restructuring mode, and thus far in 2018 investors have been pleased with his progress. The stock is up 26% so far this year, and analysts will be looking for the cost cutting and restructuring to continue. CVS earnings are expected to rise 14% on a sales increase of only 2%. CVS will be expected to give an update on its acquisition of Aetna (AET), which has been approved but has yet to close. Analysts would like an update on any additional synergies the company has identified as it works toward the closing.

The Tuesday economic calendar includes Redbook retail numbers as well as Labor Department job openings numbers. Job openings are expected to hold steady, but the number of people willing to quit their jobs, which can be an indicator of inflation, is expected to nudge higher. Tuesday is also mid-term election day with a number of high profile elections taking place across the country. With many races still too close to call, a change in control of Congress is still on the table, and may impact Wednesday’s trading. Wednesday kicks off a two day Fed meeting and also brings the release of mortgage application data Wednesday morning.

Qualcomm (QCOM), Prudential Financial (PRU) and Monster Beverage (MNST) all report earnings on Wednesday. Qualcomm earnings are expected to fall around 10% as the company is negatively impacted by its continuing dispute with Apple (AAPL). Qualcomm has accused Apple of sharing trade secrets with Intel (INTC) in the ongoing dispute between the two companies. Increasing the product offering base is expected to positively impact the bottom line at Prudential this quarter. The company is expected to report $3.14 per share, increasing earnings a little over 4%. The ability to bring in higher fees in its Annuities and Investment Management division is also expected to be a positive driver of revenue.     

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