Oct 28, 2019

It could be a wild week for the stock market and economic reports

Dion Rabouin, author of Markets

Photo: Drew Angerer/Getty Images

This week will set the table for the fourth quarter in what's been a wild and highly unusual year. The stock market has risen more than 20% in 2019, but that's largely been because of a recovery from December's selloff in the first quarter.

The big picture: "Everybody’s squared up" in anticipation, says Ellis Phifer, market strategist at Raymond James. But this week has the potential for "all hell to break loose."

What's happening: In addition to Friday's all-important U.S. nonfarm payrolls report, investors will digest a massive chunk of earnings reports and hear from three major central banks.

  • 156 S&P 500 companies, including six members of the Dow 30, are scheduled to report third quarter earnings results, FactSet notes.
  • Germany and the U.S. will report important jobs and manufacturing data, with both countries bracing for weak readings.
  • The Fed, the Bank of Canada and the Bank of Japan will each announce policy decisions, with the Fed and BOJ expected to loosen their current policy stances.

Between the lines: If the Fed doesn't cut interest rates or deliver hawkish forward guidance on Wednesday, it will weigh heavily on the market, which sees a 90% likelihood of a cut this month and expects more in 2020.

The intrigue: Investors have a lot of dry powder — data from the Investment Company Institute shows more than $160 billion has been pulled from equity mutual funds and ETFs this year while money market funds, which are effectively savings accounts, have swelled to the highest level since 2009.

  • "The gap between US equity fund flows relative to bond and cash funds during the past 12 months is the widest since 2008," Goldman Sachs research analysts said in a note.

By the numbers: Companies reporting this week are coming in with low expectations.

  • Nine of the S&P's 11 sectors are reporting a year-over-year decline in their net profit margins and the index's forward P/E ratio is currently 17, above both the five- and 10-year averages.
  • However, 80% of companies who have reported earnings so far have beaten estimates.

The bottom line: The stock market has risen on just about any form of good news this year and has rallied after bad news. But, with little faith in the U.S.-China phase 1 trade deal, a new catalyst is needed.

Go deeper

In photos: Protests over George Floyd's death grip Minneapolis

Protesters gather at Hennepin County Government Plaza on Thursday in Minneapolis, Minnesota.

Protests in response to the death of George Floyd, a black man who died shortly after a police encounter in Minneapolis, are ongoing as the nation waits to see if the officers involved will be charged with murder.

The state of play: Minnesota's governor on Thursday activated the state's national guard following violent outbreaks throughout the week.

Updated 4 hours ago - Health

World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

New Zealand has a single novel coronavirus case after reporting a week of no new infections, the Ministry of Health confirmed on Friday local time.

By the numbers: Nearly 6 million people have tested positive for COVID-19 and over 2.3 million have recovered from the virus. Over 357,000 people have died globally. The U.S. has reported the most cases in the world with over 1.6 million.

Updated 5 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 8:30 p.m. ET: 5,803,416 — Total deaths: 359,791 — Total recoveries — 2,413,576Map.
  2. U.S.: Total confirmed cases as of 8:30 p.m. ET: 1,720,613 — Total deaths: 101,573 — Total recoveries: 399,991 — Total tested: 15,646,041Map.
  3. Public health: The mystery of coronavirus superspreaders.
  4. Congress: Pelosi slams McConnell on stimulus delay — Sen. Tim Kaine and wife test positive for coronavirus antibodies.
  5. World: Twitter slapped a fact-check label on a pair of months-old tweets from a Chinese government spokesperson that falsely suggested that the coronavirus originated in the U.S.
  6. 2020: The RNC has issued their proposed safety guidelines for its planned convention in Charlotte, North Carolina.
  7. Axios on HBO: Science fiction writers tell us how they see the coronavirus pandemic.
  8. 🏃‍♀️Sports: Boston Marathon canceled after initial postponement, asks runners to go virtual.
  9. What should I do? When you can be around others after contracting the coronavirus — Traveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  10. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.