Your Wednesday Market Blip 7/5/17

Your Wednesday Market Blip 7/5/17

Stocks were mixed heading into this week’s G20 meeting in Europe. At the close the Dow fell 1 point to 21,478 on heavier trading volume. Meanwhile the S&P 500 and the NASDAQ posted solid gains thanks to a rebound in tech.

Second quarter 2017 corporate earnings get fired up next week and as of now the early indications are that we could well have a strong follow-up to the huge 14% increase in S&P 500 earnings we saw in Q1. What typically happens heading into an earnings reporting season is a reduction in estimates by the gurus as they sense uncertainty when talking to the companies they follow. This time however the analysts have only slightly lowered estimates and more importantly revenue growth is seeing a pickup. There have already been a few companies that have reported early and while this is a small sample, it indicates that earnings growth could come in the 10% to 12% range while revenue growth could be 8.5% which, if it happens, will be huge.

The Italian gubment has come to the rescue of the oldest bank in the world with a deal that will infuse Monte dei Paschi di Siena (established 1472) with about 5.4 billion euros, lay off 5,000 workers, close 600 branches and dispose of 28.6 billion euros worth of bad loans. Shareholders and junior creditors took hits but the bank avoids collapse and Europe appears one step closer to stability with this deal.

WTI crude prices fell hard as they appear caught between rising OPEC supplies which limit upside and geopolitical tensions in the Middle East and Korea limiting downside. At the close WTI crude was down 4.3% to $45.02 per barrel.