Good news on trade between the U.S. and Mexico kept a fire under the market that won’t quit on Monday. The two countries announced they had reached a deal on NAFTA, and it is expected that Canada will join the renegotiated deal, perhaps as early as the end of this week. The new deal would require that 75% of automobile content be made in the NAFTA region, compared to the current requirement for 62.5%. Automakers Ford (F) and General Motors (GM) both jumped on the news. Markets set new record highs, and the Dow reclaimed the 26,000 level.
As earnings season is in its final weeks, Tuesday morning the market will see earnings from Best Buy (BBY) and close the day with Hewlett Packard (HPE) . Best Buy is expected to increase quarterly earnings by approximately 20%. Analysts want to know if the electronics retailer is keeping pace with apparel retailers, and that consumers are not just opening their wallets for new clothes. Hewlett Packard fell after earnings last quarter and has yet to regain levels set earlier in the year. Analysts have a price target of $19.47 on the company, but they’ll likely need to have a large beat to propel the stock back toward those levels.
Tuesday’s economic calendar will have investors hopping. The full calendar includes international trade in goods, retail inventories, advanced wholesale inventories, Redbook numbers, S&P Corelogic Case-Shiller Home Price Index, consumer confidence, the Richmond Fed manufacturing index and investor confidence numbers. The Case-Shiller number will be a major focus, as housing is currently seen as one of the few possible wrenches that could be thrown into the U.S. economy. Wednesday, analysts will get to see new mortgage applications, corporate profits after taxes, which are expected to be up 2.7% year-over-year, the pending home sales index, and the EIA Petroleum Status Report. But the real conversation will be around the GDP number released at 8:30AM. GDP is expected to come in at 4.0%, a slight decrease from last quarter’s 4.1%.
On Wednesday morning American Eagle Outfitters (AEO) will take center stage. This trendy teen outpost has been on fire this year, and analysts expect nothing less than a stellar quarter. CEO Jay Schottenstein would like to announce a repeat of last quarter when the retailer beat on both earnings and sales. After the close the customer relationship management monster Salesforce (CRM) will report earnings. The $113 billion company has been on an acquisition spree, gobbling up smaller CRM companies to add to its offerings. With its stock at an all time highs, investors are expecting a very friendly report out of the company.