The bulk of third-quarter earnings is behind us, and earnings for the Standard and Poor’s 500 stock index are down 1.29% year over year. But that’s almost entirely due to the meltdown in the energy sector, down 57.2%. Absent energy, S&P 500 earnings would be up 6.3% in the third quarter, according to Standard and Poor’s Capital IQ.
Consumer discretionary stocks — the kind of stocks that do well when people have more money in their pockets — are leading the pack, reporting earnings gains of an average 15.84%. Close by are healthcare (14.9%), and telecom (14.6%). The recent pop in employment may mean that consumers have a whole lot of pent-up spending demand. It’s been an eight-year drought, after all.
Earngs reports to watch:
- Priceline (PCLN), reporting Monday, expected to report $24.24, vs. $22.16 a year ago.
- Macy’s (M), reporting Wednesday, expected to report 53 cents a share vs. 61 cents a year ago.
- Nordstrom (JWN), reporting Thursday, expected to report 73 cents a share, unchanged from a year ago.
- Kohl’s (KSS), reporting Thursday, expected to report 71 cents a share, vs. 70 cents a year ago
- Cisco Systems, reporting Thursday, expected to report 56 cents a share, vs. 54 cents a year ago. \
On the economic front, the Treasury will go to auction this week, putting out 10-year T-notes and 30-year T-bonds for investors. It’s likely to be a lively day in bondland, given the widespread anticipation of a Fed rate hike in December. Jobless claims rolls in at 8:30. They are currently at 42-year lows. The JOLTS report — job openings — rolls in at 10:00 Thursday, and could provide further evidence of a strengthening economy. That being the case, you might not want to look at your bond fund’s share price at the end of the day.
On Friday, we’ll get the producer price index, which measures inflation at the wholesale level, as well as retail sales, the University of Michigan’s consumer sentiment index, and the Energy Information Administration’s report on natural gas. Long-term investors should go see Bridge of Spies.