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Key Events That Could Impact the Markets This Week

PART:
1 2 3 4 5 6 7
Part 2
Key Events That Could Impact the Markets This Week PART 2 OF 7

What’s in Store for the S&P 500 Index This Week?

S&P 500 index scales another peak

For the week ended October 6, 2017, the S&P 500 index (SPY) closed at 2,519.36, recording gains of 0.80% for the week and the sixth straight record close. This is the longest streak of positive closes for the S&P 500 index in four years. PMI (Purchasing Managers’ Index) data from the manufacturing and non-manufacturing sectors indicated an increased demand for the sectors, but non-farm payrolls showed a fall of 33,000 jobs in September. The markets shrugged off the employment report since the fall was attributed to the recent hurricanes.

In the previous week, the materials sector (XLB) was the best performing sector, followed by financials (XLF). A fall in oil prices led to a decline in the energy sector (XLE) that week.

What’s in Store for the S&amp;P 500 Index This Week?

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Speculators pared bullish bets on the S&P 500 index

For the week ended October 6, 2017, large speculators of the S&P 500 (IVV) index have decreased the number of net bullish positions from 21,137 contracts to 19,927 contracts. The number was reported by the CFTC (Commodity Futures Trading Commission) through its weekly Commitment of Traders report. Speculators reducing their net long positions could mean a readjustment before the earnings season, but the overall net position remains biased toward further gains.

Another peak in sight this week?

Third-quarter earnings of major companies are scheduled to be reported this week. Majors in the financial sector (XLF), including JP Morgan, Citi, and Bank of America, will report their earnings this week. The impact of the proposed corporate tax cuts has already added a positive momentum to the equity markets and institutions. Citi and Goldman Sachs have estimated a 7.0% rise in their expected earnings for 2018 if the corporate tax is lowered to 20.0%. If there are no surprises from geopolitical issues or domestic politics, it’s likely that investors could be excited about the results. Can that excitement last through the entire earnings season? We’ll have to wait and watch.

In the next part of this series, we’ll analyze the performance of the US dollar in the previous week and what could move the dollar in the week ahead.

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