Market Preview: Post Midterm Elections, Earnings from Disney, Activision Blizzard, and GNC

Markets like certainty. The generally expected election results, with Democrats taking control of the House of Representatives and Republicans solidifying control of the Senate, seemed to please investors Wednesday. Markets rose across the board with the Nasdaq putting in the largest percentage gain at 2.64%. The S&P 500 rose 2.12% and the DJIA tacked on 2.13%. President Trump added to market gains by striking a conciliatory tone and implying he could work with a Democratic House to pass an infrastructure bill. Whether investors believed the rhetoric, or if they are relying on a split government to “do no harm” is unclear. But, since both beliefs can lead to a higher market, investors headed multiple calls from CNBC talking heads that post midterm elections the market generally moves higher.

Walt Disney (DIS), Activision Blizzard (ATVI) and Johnson Controls (JCI) all report earnings on Thursday. Analysts will be looking for Disney to provide an update on the acquisition of Twenty-First Century Fox (FOXA) assets. Investors will be paying particular attention to metrics around direct-to-consumer subscription services which will eventually be utilizing the Fox assets. If Disney can get the mix of investments necessary to promote and push out its media services in line with profit predictions, the market may look favorably on the company headed into next year. While Activision’s latest iteration of Call of Duty has been a hit, the stock has taken a beating over the last month. Analysts fear an oversaturation in the gaming market may be impacting stocks like Activision.

The economic headline Thursday will arrive at 2pm when the Fed releases its statement following a two day meeting. While no action is expected on rates, investors will be monitoring the announcement closely for any change in wording. Jobless claims, released Thursday morning, are expected to drop slightly to 213k. The number has been on a fairly steady decline for over two years now. Friday’s consumer sentiment number is expected to ease slightly from the 98.6 reported in October to a flat 98 in November. Also coming on Friday are wholesale trade numbers and the producer price index (PPI). PPI is expected to rise slightly, .2%, month-over-month.

Closing out the first full week of November earnings are GNC Corp. (GNC) and Potbelly (PBPB). GNC delayed its earnings announcement a few days to attempt completion of a strategic investment by a Chinese investor, Harbin Pharma. Investors will be looking for an update on the investment and possible joint venture activity with the Chinese partner. Potbelly is expected to announce positive earnings as a new management team is attempting to revamp the sandwich maker. Analysts will be looking for bold moves from the brand on hopes of powering the stock higher.

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