Second-quarter earnings strength has helped propel the Dow Jones Industrial Average to new levels as positive corporate guidance predicts continued growth, Prudential’s Chief Market Strategist Quincy Krosby said Monday in her weekly “Connecting the Dots” outlook.
Friday’s positive jobs report from the federal Bureau of Labor Statistics showed a gain of 209,000 jobs—above expectations, and showed wages moving slightly higher. The market also will be paying attention Thursday when New York Federal Reserve Bank President William Dudley is scheduled to speak, Krosby said.
With 84 percent of the companies that make up the Standard & Poor’s 500 having already reported earnings, revenue has gone up 10.1 percent year over year, Krosby noted. Expectations were in the 7 percent range, and companies have been upbeat about the future.
“That’s something the market has taken note of, this optimism coming out in terms of guidance,” she added.
When Dudley addresses an economic press briefing Thursday, analysts will be listening for any clues on his impression of the direction of the economy.
“What the market is really looking for is an assessment, and any sense at all of where they see rate hikes for the rest of this year,” Krosby said.
This week’s economic data will focus on inflation, which the Fed is watching closely to decide whether to continue raising interest rates. The Consumer Price Index, a measurement of a fixed basket of goods and services, will be released Friday and the Producer Price Index, which measures what domestic producers get for goods and services, on Thursday.
These are important as the Federal Reserve is focused on inflation as it considers increasing interest rates. The futures market is now predicting close to a 49 percent chance of a rate hike this year, after being as low as the 30 percent range, she said.
To talk to Quincy Krosby about her views of the market, contact Lisa M. Bennett or Dara Scerbo.
Read Quincy Krosby’s full Q3 Market Commentary: Third Quarter Checkup.
The views and opinions are those of the author at the time of publication and are subject to change at any time due to market or economic conditions. This is solely for informational purposes. This is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.