Earnings season kicks off. U.S. stocks are higher this morning as third quarter earnings season kicks off with a slew of big bank reports. The few reports we’ve seen so far this season have been generally in line with expectations. Overall, we expect to see little if any S&P 500 Index earnings growth for the quarter amid continued trade tensions. However, we think better days are coming for corporate profits. Check out this week’s Weekly Market Commentary: Earnings May See Better Days Ahead for more earnings season predictions.
A big week for yields. The 10-year U.S. Treasury yield climbed 20 basis points (0.20%) last week to 1.73% amid encouraging trade and Brexit headlines, pushing most of the curve out of inversion territory (or long-term yields below short-term yields). Yields are slightly lower this morning after bond markets were closed on October 14 for Columbus Day. Even though domestic fundamentals suggest a higher 10-year yield from these levels, we think still-elevated global uncertainty could prevent yields from pushing much higher.
Light at the end of the tunnel? The debate over the United Kingdom’s withdrawal from the European Union (EU), or Brexit, is reaching another milepost in what could be an action-packed week. Talks between the UK government and the EU have entered “tunnel” negotiation mode, in which all details of behind closed door talks are expected to remain secret until any deal occurs. After that, any deal could be passed to EU member states (and then to the UK Parliament) for votes. On the LPL Research blog today, we’ll give you an update on Brexit, and what we expect as the October 31 deadline nears.
NEW Market Signals podcast. Stocks gained last week after dropping three consecutive weeks, and we’re seeing more positive signs for the economy. Listen to this week’s Market Signals podcast as LPL strategists discuss “A Few Positive Signs,” including progress in U.S.-China trade talks, more Brexit discussions, potential upside in earnings reports, and possibly positive signals from yield curves. To listen to previous podcasts go to Market Signals podcast. Subscribe to the free Market Signals podcast series on iTunes, Google Play, Spotify, or wherever you get your podcasts.
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