Following last week’s tumultuous trading that saw the Dow tumble 1400 points on fears of a trade war with China, cooler heads appear to be prevailing in today’s pre-market. In fact, Dow futures ahead of today’s bell have thus far climbed over 300 points — do this every day and we’ll see those garish losses from last week wiped out completely!
Why such a quick turnaround? Well, for sure we’ve seen trade war fears ebb on some reassuring words from President Trump’s cabinet over the weekend, including Treasury Secretary Steve Mnuchin sounding a relatively confident tone on reaching a new trade agreement with China, saying he’s “cautiously hopeful” we’ll avoid a trade war. Also, strength in new Durable Goods orders on Friday — yet another strong economic metric tracking the U.S. economy — which went overlooked in worrisome trading late last week may be getting a second look this morning.
Further, we should never underestimate the power of bargain-seeking investors. After all, Friday’s close represented the lowest the S&P 500 has traded since February 8th, and the Dow finished at its lowest point since November 22 of last year.
Also last Friday, Zacks Director of Research Sheraz Mian released his latest Earnings Trends report, in which his forward outlook on Q1 earnings season — the quarter officially ends Friday, though major reportage won’t begin until the big banks bring forth their data a couple weeks from now — is quite good. Corporate tax relief should bring windfalls to companies’ bottom lines, which should translate to benefits for shareholders.
As a result, Sheraz has also seen earnings estimate revisions growth hitting levels we’ve not seen since well before the onset of the Great Recession: from +9% expected for the S&P 500 in Q1 from 90 days ago to +15.9% in the most recent read, with estimates rising for 13 of 16 sectors. This points toward unprecedented earnings growth in recent history, and although it is indeed the corporate tax cuts leading the way, we would do well not to overlook the healthy environment across most sectors in the U.S. economy.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment