The Day Ahead: Busy Day for Data, Earnings
Equity futures are retaining gains after yesterday’s 1.75% climb. The day ahead is full of new economic data and sentiment is generally higher as earnings statements for the third quarter have been beating forecasts. Most recently, Goldman Sachs reported earnings per share of $5.25 in Q3, a full dollar more than estimates.
Ninety minutes before the bell, the S&P 500 is up 1.75 points to 1,089.50, while WTI crude oil is up ten cents to $75.28 per barrel, and spot gold is down $11.60 to $1050.80.
In addition to data, investors are waiting for earnings from Citigroup this morning, and after the closing bell markets will hear from IBM. The Dow closed about 10,000 for the first time in a year yesterday, so it will certainly be a big day for markets.
Key Events:
8:30 ― Inflation is expected to remain benign. The all-items Consumer Price Index moved up 0.4% in August and core prices (ex-energy, ex-food) inched up just 0.1%. In September both indexes are set to rise 0.1%.
Analysts from Nomura Global Economics attribute the tame forecasts to high unemployment and low capacity usage. “This slack in resource availability will persist until the economy is once again growing at a pace consistent with its long-run potential, which we expect to develop late in 2010,” they said. “Consequently, core inflation is likely to trend steadily lower over the next two years.”
8:30 ― The first regional manufacturing report is expected to remain in growth territory for the third straight month. The Empire State survey isn’t expected to match September’s 18.9 score, but the 17.5 level predicted by Wall Street continues to point towards healthy stabilization.
8:30 ― Last week’s Jobless Claims report saw initial filings for unemployment benefits drop to the lowest level since January. There were 521,000 filings, still far too high to suggest net job creation, and economists don’t expect much improvement this week. The Street’s forecast is 520k.
“Our dogged attempt to find evidence of a solid return to job creation has turned up nothing,” said Ellen Zentner, senior economist at BTMU. “But what we do find is plenty of evidence that job loss will continue to slow, even if it is simply a side effect of fewer separations, rather than increased hirings.”
10:00 ― It’s always helpful when two manufacturing reports hit markets on the same day. The Philadelphia Fed report will get a lot of attention to see if it matches with the trend set by the Empire State survey from 90 minutes prior. In the past two months, it has. Both indexes have reported stronger growth than anticipated, though expectations are more muted this month. Look for a 12.5 score in October following the 14.1 reading in September.