Equities inched higher last week as the S&P and other major indexes gained about 1% and the Dow Jones Industrial Average crossed the psychologically important 20,000 mark. Treasury Yields remained relatively steady, and the U.S. dollar lost a little bit of ground against other major currencies as some of President Trump’s policies came into focus. On the economic front, data was mixed with Durable Goods orders and GDP disappointing slightly, while existing home sales and trade data came in line with expectations. On the earnings front, so far 170 of the S&P 500 constituents have reported. Of these, 52% have reported positive revenue (sales) surprises, while 74% have reported positive earnings surprises – following the trend of recent quarters.
After President Trump’s executive order banning travel from seven middle-eastern countries, which was announced on Friday, expect the media to focus on this topic and the potential impact on businesses. In our view, it is unlikely that this will have a deep or lasting economic effect, however there could be a long-lasting impact on international relations. From a market perspective, earnings will continue to matter most, followed by economic data releases relating to home prices, inflation and consumer confidence. Wednesday’s FOMC meeting could bring the second consecutive interest rate hike, however given some of the more benign inflation and growth data released last week there is an equal chance of no moves.