Bankers get the day off due to the Columbus Day holiday, but traders return to their terminals and iPads this morning to find the markets stronger with oil and energy names continuing to lead. I expect light volume today due to the banking holiday, which could actually lead to outsized price moves in either direction. The idea here being if there are less folks watching and involved today in the market there will be less liquidity available to counter the demand for interested buyers or provide bids if sellers emerge.
Last Friday we got a payroll number of 156,000 new non-farm jobs. This was less than the estimates of 170,000 which neither confirmed for traders that the Fed would increase rates in December, nor did it take possible Fed action off the table. The Dollar gained strength notably against the pound sterling and gold. Utility and dividend paying shares were generally weak as the prospects for higher interest rates make holding these shares relatively less beneficial. The major averages for the week lost less than 1% as higher rates worries actually helped out financials and oil names were strong due to the first OPEC agreement for production cuts and lower reported inventory numbers.
XLU – Utility ETF XLF – Financial ETF
This week actual earnings season unofficially begins on Tuesday with Alcoa (AA) releasing their 3rd quarter results before the market open. Financials giants Citigroup (C), JP Morgan Chase, and the much maligned Wells Fargo (WFC) will report results.
You can see all upcoming earnings on the OptionHouse platform in multiple views. All positions and watchlist views will show an earnings icon when the confirmed earnings release is within 5 trading days.
Also upcoming confirmed and estimated earnings are shown on the Calendar tool found in the Markets tab.
Fed minutes from their September meeting will be released on Wednesday. We know that there was significant dissension among the governors on the decision to hold rates steady. Traders will dissect the minutes for additional clues to confirm whether the assumption that a rate raise is coming in December is accurate.
The other significant macro event this week is Retail Sales on Friday. This release can have an earnings type effect on the prices of consumer sector stocks. Consumer spending overall is also an indication of the strength and direction of the economy which is why this data point is important for investors as well as another data point for the Fed.
So these coming weeks should be particularly interesting to investors. Earnings season kicks off, we have the release of the Fed meeting minutes and various Fed presidents speaking and this little election is now at 28 days and counting…
Oh and the Cubs magic number is down to 9!
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