Stocks opened the trading week on a slight uptick as banks, techs and material stocks traded higher. The Dow closed today’s session with a small drop of 13 points to 25,044. Trading volume was down and after the bell Google was scheduled to report earnings.
This week will see the bulk of companies in the S&P 500 Index report earnings. So far this year over 87% of those companies that have reported have done better than expected and the gurus are saying that Q2 earnings are now on track to be up 20.8% over this time last year. Mr. Sunshine, aka Brian Wesbury, chief economist at First Trust has said that with a relatively flat market so far this year coupled with earnings growth in the 20% range means the markets are undervalued at the current juncture and have upside potential of 15% or more. No wonder they call him Mr. Sunshine! While he could be right there are other gurus saying that earnings are peaking and that going forward they will fall thus taking markets down with them. Now if I could just figure out which guru is right then I too could be a guru.
The 2nd quarter GDP growth estimate will be issued this Friday and there seems to be general optimism heading into the release. Some are calling for a reading of 4% as consumer spending and business investment appears to be strong. One area of unknown impact is trade which has been buffeted lately by tariffs and changing tides of negotiations.