Week Ahead: Wall Street Waits to Exhale

Investors anxiously await action on Obamacare repeal, tax reform and interest rates. Here's what to look for in coming days.

The bull market turned eight last Thursday, but the birthday celebration was muted. As the stock market bubble continues to inflate and political tensions rise, investors are holding their collective breath.

Will the long-awaited correction come this year or can the market dodge the inevitable until 2018 or even 2019? Another concern is whether the Trump presidency will fulfill its business-oriented promises or end in disaster.

As you navigate this tumultuous investment climate, your watchwords should be prudence and caution. Capital appreciation is only part of the goal; capital preservation is important, too. Here's your guide for the week ahead.

The stock market last week posted its third weekly decline of the year, falling 0.4% to narrow its first-quarter gain to 6%. In the spotlight was crude oil, which fell more than 5% to hit a new 2017 low. The U.S. benchmark dropped below the psychologically significant threshold of $50 per barrel to close on Friday at $48.49. The culprit for crude's drop was a bearish short-term inventory report to which investors probably overreacted. Other data indicate that global demand for oil will outstrip supply after 2020.

However, investors were encouraged by the latest U.S. jobs report released Friday, which showed that the U.S. economy added 235,000 jobs in February while the unemployment rate dipped to 4.7%. The Bureau of Labor Statistics (BLS) report also showed average hourly earnings rose by 6 cents in February, accelerating the rate of wage growth from last month. Earnings are now up 2.8% over the year.

Not surprisingly, the new Trump administration was quick to take credit for the data, even though the positive momentum on jobs was inherited from Barack Obama. It should also be noted that during the presidential campaign that Donald Trump had derided BLS reports as "fake" and unreliable.

But Wall Street cares less about political consistency and more about results. The new employment data was unexpectedly robust and dampened fears that the economy is heading for a recession. Investors now eagerly await corporate and personal tax reform. However, if promised tax cuts don't come this year, it could be the pin that busts the overvalued market's balloon.

Another potential correction catalyst is the maladroit effort in Congress to repeal and replace Obamacare. House Republicans put forth a plan last week that's hated by everyone on the political spectrum. Indeed, most political observers deem the plan Dead on Arrival. If that's the case, protracted wrangling over health care could impede tax reform and other market-friendly promises made by Trump, such as massive infrastructure repair.

Also commanding attention in the week ahead will be the Federal Reserve. In the wake of last Friday's positive jobs data, the central bank is expected to announce another interest rate hike on March 15.

Noteworthy earnings reports in coming days include those from Guess (GES) and Oracle (ORCL) (Wednesday); Dollar General (DG) (Thursday); and Tiffany & Co. (TIF) (Friday).

Oracle's third-quarter scorecard for fiscal 2017 will especially garner attention, as traders seek clues for the health of the overall technology sector. The average analyst expectation is that the tech giant's earnings per share will come in at 62 cents, compared to 64 cents in the same year-ago quarter.

Oracle's fast-growing cloud services combined with a robust balance sheet and improving margins bode well for the stock. Investors will scrutinize operating results to see whether the company's cloud growth is sustainable.

Scheduled on the economic calendar: FOMC Meeting Begins (Tuesday); Consumer Price Index, Retail Sales, and Housing Market Index (Wednesday); Housing Starts and Jobless Claims (Thursday): Consumer Sentiment, Leading Indicators, and Baker Hughes (BHI) Rig Count (Friday).

By John Persinos

Source:https://www.thestreet.com/story/14038016/1/the-week-ahead-wall-street-waits-to-exhale.html

Week in Review: Dow Posts Gains for Third Straight Week Amid Record Streak

The Dow Jones Industrial Average closed out Friday with gains for the third week in a row as a record-breaking streak propelled the index higher.

The Dow Jones Industrial Average closed out Friday with weekly gains for the third time in a row as a record-breaking streak propelled the index higher. 

The Dow has risen 0.96% over the past four days in a holiday-shortened week. The S&P 500 increased 0.69% and the Nasdaq jumped 0.12%. 

The Dow climbed every day this week, securing its longest record-breaking streak in three decades. The blue-chip index has closed higher after 11 consecutive sessions thanks to optimism over a forthcoming tax plan from the White House. 

However, with few developments on that front, the record rally has taken on a life of its own, benefiting from individual stock moves, such as a better-than-expected quarter from Walmart (WMT) and reports DuPont (DD) could clear regulatory hurdles in its merger with Dow Chemical (DOW) .

"Sentiment in the market has generally been very upbeat except for the first few hours after the election results," Bodhi Ganguli, lead economist at Dun & Bradstreet, told TheStreet. "There is a lot of expectation of business-friendly policies from the new administration... We have to wait for details to see exactly how they're implemented, but the economic policies that have been proposed are very conducive to higher fundamental growth of the economy."

Overall economic improvements have moved the Federal Reserve to shift its rhetoric toward hawkishness. In minutes from the Jan. 31-Feb. 1 meeting released this week, members of the Federal Open Market Committee said it would be appropriate "fairly soon" to make a move higher. Members said that holds true so long as the incoming labor market and inflation data was in line with or stronger than expected.

Even as the Fed says the March meeting is live, the market continues to only expect a small chance of a near-term hike. This could cause some turbulence in coming weeks, warned Bill Merz, markets strategist at the Private Client Reserve at U.S. Bank. 

"A surprise near term hike could trigger volatility," said Merz. "Our base case is for two Fed hikes in 2017 with a chance of a third. Other risks include delays in passing material legislation in the U.S., and a surprise Le Pen victory in the French Presidential election, though odds of the latter remain relatively low for the time 

Retailers were in the spotlight this week with a number of chains reporting on their performance over the critical holiday shopping season. Walmart (WMT) , the world's largest retailer, topped fourth-quarter earnings estimates, raised its dividend and guided for an in-line first quarter. Same-store sales in the U.S. climbed 1.8%, beating consensus of 1.3% growth.

Walmart wasn't the only retailer to top estimates. Home Depot (HD) reported a solid quarter which benefited from a healthy housing market. The DIY home-improvement retailer reported 5.8% sales growth at locations open at least a year, higher than estimates of 3.5%.

J.C. Penney (JCP) fell short of profit and sales estimates over its fourth quarter. The department store chain also announced plans to shutter as many as 140 stores over the next few months. Nordstrom (JWN) topped quarterly profit and reported sales growth over its recent quarter, enjoying the bulk of gains at its discount stores

Macy's (M) beat analysts' quarterly estimates on its bottom line, while fourth-quarter same-store sales fell 2.1%. Kohl's (KSS) exceeded quarterly estimates and met full-year profit expectations. The retailer said it saw "declines in brick-and-mortar traffic" over the quarter, though online demand countered some of that drag.

TJX Cos. (TJX) , which owns TJ Maxx, narrowly beat profit and sales estimates over its fourth quarter. Same-store sales rose by 3%, topping expectations of 2.5% growth. The retailer also said it plans to repurchase at least $1.3 billion worth of shares over this fiscal year.

Better-than-expected earnings from retailers came as a relief to investors who were wary heading into the industry's portion of the earnings season. Slower traffic at malls and cautious consumer spending are expected to have contributed to retail weakness. Retail earnings are expected to increase by 5.2% over the fourth quarter, according to Thomson Reuters estimates.

By Keris Alison Lehiff

Source: https://www.thestreet.com/story/14015842/1/week-in-review-dow-posts-gains-for-third-straight-week-amid-record-streak.html

The 10 Best Stock Charts on Wall Street Right Now

Many of the top-looking stock charts at the moment are turnaround plays

The Dow Jones Industrial Average continues to melt to incremental new highs, seemingly oblivious to the build up of overbought technical indicators, extreme bullish sentiment, and the risk of more aggressive interest rate hikes from the Federal Reserve. Stock charts are an amazing thing to watch right now, with breakouts popping up left and right.

While some of the other major averages are dithering here (ahem, Nasdaq, ahem) the Dow Jones is steadfast.

Breadth has been an ongoing concern as buying interest has been focused on areas like financials and industrials. So assuming the uptrend is going to continue, buying interest will need to widen. Nonetheless, a number of stocks look ready to roar, and they come across a number of sectors — from tech to consumer staples to even utilities.

• 7 Ultra-Cheap Value Stocks to Buy Now

The following is what I believe the 10 best stock charts on Wall Street right now — and many of them are comeback stories.

Best Stock Charts Right Now: Square (SQ)

Square Inc (NYSE:SQ) pushed to fresh post-IPO highs on Thursday, surging up and out of its upper Bollinger Band in a powerful show of force and breaking out of the uptrend channel that started back in June.

The catalyst for Square’s stock chart breakout was the reporting of better-than-expected revenues and earnings and solid forward guidance.

Analysts at Canaccord Genuity raised their price target on the payment processor, as concerns about competitive dynamics and profitability pressure have been alleviated. Their PT was upgraded from $14 to $16 — more or less just playing catch-up with recent gains.

Square will next report results on May 24 after the close. While SQ might need time to consolidate these gains, the stock looks like it’s off to the races for now.

Best Stock Charts Right Now: Verizon (VZ)

Shares of wireless telecom giant Verizon Communications Inc. (NYSE:VZ) are on the move in a big way, lifting out of a month-long consolidation range between $49 and $48 to lift up and out of its upper Bollinger Band.

Investors have been encouraged by the company’s ability to lower its acquisition price for Yahoo! Inc. (NASDAQ:YHOO) by $350 million in response to an embarrassing data breach. The next time we’ll hear anything from the company on the earnings front will be April 20 before the bell, when analysts will hope to see profits of 99 cents per share on revenues of $30.7 billion.

• The 10 Best Stocks to Buy and Hold Forever

Technically speaking, VZ has one of the more hopeful-looking stock charts right now. Verizon looks ready to challenge the 50-day and 200-day moving averages before making another attempt at its summertime high near $55, which was unsuccessfully tested in early January.

Best Stock Charts Right Now: Groupon (GRPN)

Groupon Inc (NASDAQ:GRPN) shares have blasted higher — up and out of their upper Bollinger Band and above its 200-day moving average — to fill the chart gap around $4.50 from the surge in July and the decline in October.

Shares surged in response to better-than-expected quarterly numbers, noting solid consumer activity in December as confidence bounced back after the election.

RBC Capital analysts highlighted the company’s fourth consecutive quarter of adding more than 1 million users in the North American region.

The company will next report results on April 27 after the close. Analysts are expecting a break even on revenues of nearly $730 million. Between then and there, Groupon will look to challenge the $5 area — the lower part of a range where GRPN traded from September through November before bottoming out.

Best Stock Charts Right Now: TJX (TJX)

TJX Companies Inc (NYSE:TJX) is among the best stock charts in retail right now, testing levels not seen since late November.

The stock has been flatlining since last February centered on the $78-a-share level. But renewed interest after a solid earnings report could reinvigorate interest in the discount retailer. The company reported better-than-expected earnings of $1.03 per share (3 cents ahead of estimates) on a 6% jump in revenues. Management also announced a 20% increase to its dividend.

• 7 Consumer Stocks That Will Knock Your Socks Off

Right now, TJX is breaking up and out of their upper Bollinger Band. This could be a possible attempt to challenge last summer’s highs around $83.

Best Stock Charts Right Now: Walmart (WMT)

Wal-Mart Stores Inc (NYSE:WMT) shares are gapping higher, lifting up and out of a downtrend channel that started last summer.

The move comes after the reporting of solid quarterly results: Walmart earnings of $1.30 per share beat estimates by a penny on a 1.8% jump in U.S. comp-store sales (vs. 1.0%-1.5% guidance). The increase was driven more by customer traffic rather than average ticket, which is a positive sign suggesting a shift in behavior that could be long lasting.

The company’s next report isn’t until May 18, when analysts will want to see 96 cents per share on revenues of $117.1 billion.

Currently, WMT stock is challenging its December highs. The next big price level after that is above $74.50, which Walmart touched this August.

Best Stock Charts Right Now: Johnson & Johnson (JNJ)

Johnson & Johnson (NYSE:JNJ) shares are continuing their powerful march higher, returning to levels not seen in August after crossing above both its 50-day and 200-day moving averages, exiting a five-month basing range with support near $112-$110.

The rally stands in contrast to the slippage in late January after Johnson & Johnson reported disappointing fourth-quarter sales and issued weak forward guidance.

The rally is being fueled, it seems, by a search for value among large-cap investors.

• 9 Top Pharmaceutical Stocks to Buy for the Dividends

JNJ will next report results on April 18 before the bell. Analysts are looking for earnings of $1.76 per share on revenues of $17.98 billion. Edge Pro subscribers recently closed a position in the March $115 JNJ calls for a gain of nearly 170%.

Best Stock Charts Right Now: Colgate-Palmolive (CL)

Colgate-Palmolive Company (NYSE:CL) shares are going vertical, pushing past their summertime highs to hit new records — up a whopping 17%-plus from late January.

The catalyst has been intense M&A activity in the consumer staples space, with a $150 billion-plus bid for Unilever N.A. (ADR) (NYSE:UN) from Kraft Heinz Co (NASDAQ:KHC) making headlines. Although the bid was rejected, it’s raising valuations across the sector. This was great news for shareholders after the company missed sales estimates in its latest quarterly report.

Colgate will next report results on April 28 before the bell. Analysts are looking for earnings of 66 cents per share on revenues of $3.9 billion.

Right now, the ceiling on CL shares has been removed.

Best Stock Charts Right Now: Unilever (UN)

Unilever N.V. (ADR) (NYSE:UN) shares — the ADRs traded here in New York — are consolidating their post-M&A announcement surge near last September’s highs which in turn capped a multi-month consolidation range.

While Unilever rejected the offer from Kraft Heinz as too low, resulting in the bid being pulled (as mentioned above), this was quickly followed up with an announcement of a comprehensive review of options to boost shareholder value.

KHC may well continue to circle the company, especially if shareholders lose patience with management.

• The 7 Most Popular Vanguard Funds for 401k Plans

For now, let speculation be your friend as UN pushes new heights.

Best Stock Charts Right Now: Duke Energy (DUK)

Duke Energy Corp (NYSE:DUK) looks like one of the best stock charts in the utility sector, with DUK rising up and out of an inverse head-and-shoulders reversal pattern that started in October. Shares are above their 200-day moving average as they extend above the upper Bollinger Band.

Although the company reported weaker-than-expected earnings on Feb. 16, shares are being propelled by a surge of buying interest in the entire utilities space. Thus, Duke’s next report isn’t for a while — May 2, before the bell, when analysts will look for a bottom line of $1.08 per share on a top line of $6.1 billion.

In the meanwhile, watch for a run at the July high near $84.50.

Best Stock Charts Right Now: Southern Co (SO)

Speaking of utilities, Southern Co (NYSE:SO) shares are blazing up and out of a four-month basing pattern while also rising up and over their 200-day moving average and upper Bollinger Band.

The impressive demonstration of upside strength on Southern’s stock charts breaks a downtrend pattern that started last summer and follows the reporting of mixed quarterly results: Earnings of 24 cents per share missed estimates by 6 cents, but revenues rose 45% from the prior year to $5.18 billion vs. the $4.4 billion expected.

• The 10 Best Stocks for 2017

The company, which next reports on May 24 before the bell, is benefiting from renewed interest in yield-sensitive utility stocks as long-term interest rates stall out.

Anthony Mirhaydari

Source:http://investorplace.com/2017/02/the-10-best-stock-charts-on-wall-street-right-now/view-all/#.WK-U2_krI2w

Wall Street Breakfast: The Great Golden Arches Of China?

McDonald's has entered an agreement to sell 80% of its 2,200 stores in China and Hong Kong to a consortium including Citic (OTCPK:CTPCY) and Carlyle Group (NASDAQ:CG). It decided to keep a minority stake to benefit from exposure to future growth, a source told Reuters. The deal, which includes 20-year mass franchise rights, will value the business at as much as $2.08B and likely help McDonald's (NYSE:MCD) trim its overall operational costs and preserve capital.

Economy

At least nine confirmation hearings begin on Capitol Hill this week, starting tomorrow with one for Sen. Jeff Sessions, whom President-elect Trump has nominated to lead the Justice Department. The lineup also includes five hearings on Wednesday, the same day the Senate is expected to vote on a step toward repealing much of the Affordable Care Act.

"I think he accepts the findings," said Trump's incoming chief of staff Reince Priebus, referring to U.S. intelligence reports on Russian interference in the presidential election, adding that "actions may be taken." Over the weekend, Trump tweeted that "having a good relationship with Russia is a good thing... Only 'stupid' people, or fools, would think that it is bad! We have enough problems around the world without yet another one."

Theresa May has denied the government's approach to Brexit is "muddled" in response to criticism by the U.K.'s former EU ambassador, Sir Ivan Rogers, who quit his post last week. "We are leaving. We are coming out. We are not going to be a member of the EU any longer," she told Sky News. "I will be setting out some more details in the coming weeks as we look ahead to triggering Article 50." Sterling -1.1% to $1.2148.

China's foreign exchange reserves fell for the sixth the consecutive month in December, but held just above the critical $3T level, as authorities stepped in to support the weakening yuan. According to PBOC data, the world's largest stockpile of foreign currency plunged by $41.08B to $3.01T, the lowest level since March 2011.

The dollar is likely to hit parity with the euro during 2017, according to Goldman's chief economist Jan Hatzius, driven by diverging paths for interest rates. "If we are right that the Fed moves the funds rate up more than what the market's currently pricing... that's generally a relatively good indicator to watch." Euro -0.1% to $1.0526.

Stocks

Showing its commitment to American manufacturing, Fiat Chrysler (NYSE:FCAU) will invest $1B in plants in Michigan and Ohio, which will add 2000 new jobs in the U.S. and expand its sports utility and truck lineup. The announcement comes days after Ford (NYSE:F) decided to scrap a plan to build a facility in Mexico, instead opting to invest in a plant in Michigan. FCAU +2.2% premarket.

Self-driving cars are a big theme at the North American International Auto Show, which kicked off yesterday in Detroit. Alphabet's (GOOG, GOOGL) Waymo revealed that it has built all of its sensor hardware in-house and was ready to offer its autonomous-drive technology in "millions" of vehicles at a competitive price. A package of LIDAR sensors and radar, which used to run approximately $75,000 a few years ago, has fallen by more than 90%.

The FBI has arrested Volkswagen's (OTCPK:VLKAY) regulatory compliance executive, Oliver Schmidt, who faces conspiracy charges linked to Dieselgate, according to NYT. The arrest comes as VW nears a deal to pay the DOJ more than $3B to settle the emissions scandal's criminal investigation, on top of the nearly $17.5B the automaker will pay to resolve civil claims.

Will Mercedes become the world's top luxury carmaker? Daimler (OTCPK:DDAIF) sold more than two million Mercedes branded cars in 2016, achieving the milestone for the first time since 2005. Sales increased 11.3% on year, driven by demand for SUVs, the C-Class family and AMGs. BMW (OTCPK:BAMXF), which has held the premium sales crown since 2005, is due to release annual sales figures later today.

SpaceX's much-vaunted return to flight was delayed over the weekend due to bad weather around a central California launch complex. The latest schedule calls for the Saturday blastoff of a Falcon 9 rocket, carrying 10 satellites for Iridium Communications (NASDAQ:IRDM). SpaceX (Private:SPACE) has been grounded since its pre-flight test explosion in September.

Shares in Lufthansa flew lower overnight, falling 5.3% in Frankfurt, as the airline's trading outlook disappointed investors. Lufthansa (OTCQX:DLAKY) said fuel costs will rise this year and failed to provide an earnings forecast for 2017, but Barclays believes "the implication is for declining profitability year-on-year."

Marking a key step in opening up trade, IranAir has accepted its first brand-new plane in over 37 years following the Islamic Republic's nuclear sanctions deal. "The registration has been done," said Reza Jafarzadeh, a spokesman for Iran's Civil Aviation Organization. The Airbus A321 (OTCPK:EADSY) jetliner has been painted in IranAir livery and is expected to be delivered on Thursday.

The British government is no longer the top shareholder in Lloyds (NYSE:LYG) after reducing its stake to below 6% as it aims to return the lender to full private ownership this year. The title is now owned by BlackRock (NYSE:BLK). U.K. Financial Investments Limited resumed Lloyds share sales in October, having halted them for almost a year due to market turbulence. LYG -1.2% premarket.

French drugmaker Ipsen is buying some assets of Merrimack Pharmaceuticals (NASDAQ:MACK), including pancreatic cancer drug Onivyde, for up to $1B, barely a month after the U.S. company stopped a breast cancer drug trial. The deal would give Merrimack the resources to fund the development of three new compounds targeting cancer and boost Ipsen's (OTCPK:IPSEY) portfolio, which has traditionally focused on endocrinology. MACK +37.5% premarket.

UnitedHealth's Optum unit is acquiring Surgical Care Affiliates (NASDAQ:SCAI) for $2.3B, in a deal it expects to be neutral for adjusted net EPS in 2017 and modestly accretive in 2018. While the purchase is a relatively small one for UnitedHealth (NYSE:UNH), whose annual revenues last year were around $180B, it marks the latest step in the firm’s evolution from a traditional insurer to a diversified health services company.

SeaWorld in San Diego hosted its last killer whale performance on Sunday after promising to phase out the show due to outcry over animal rights and pressure from falling attendance. Instead, the SeaWorld (NYSE:SEAS) park will unveil a new attraction this summer. "Orca Encounter" is being billed as an educational experience that will show how killer whales eat, communicate and navigate.

After securing exclusive rights for the handset name, HMD Global is launching the first Nokia (NYSE:NOK) branded smartphone since the Finnish-based company was sold to Microsoft (NASDAQ:MSFT) in 2014. The new Android device, Nokia 6, is manufactured by Foxconn (OTC:FXCOF) and will be sold exclusively in China through JD.com (NASDAQ:JD) for a list price of 1,699 yuan ($246).

The Golden Globe Awards looked past the big Hollywood studios on Sunday to lavish most of its attention on Lionsgate (LGF.A, LGF.B) and its retro-musical La La Land. The motion picture took home seven statuettes, a new record for the most Golden Globes by a single movie, and has so far grossed $51.7M domestically and $34.1M worldwide.

Reigniting Star Wars fever in China appears to be a goal far, far away for Disney (NYSE:DIS). According to comScore, Rogue One opened this weekend to a fairly tepid $31M over three days at the country's box office. That was about 60% of what The Force Awakens grossed in its first two days - a year ago - in the world's second-largest movie market.

Today's Markets 

In Asia, Japan closed. Hong Kong +0.3%. China +0.6%. India -0.1%. 
In Europe, at midday, London +0.1%. Paris -0.7%. Frankfurt -0.5%. 
Futures at 6:20, Dow -0.2%. S&P -0.1%. Nasdaq flat. Crude -1.8% to $53.02. Gold +0.5% to $1179.50. 
Ten-year Treasury Yield -3 bps to 2.39%

Today's Economic Calendar

10:00 Labor market condition index
12:30 PM TD Ameritrade IMX
12:40 PM Fed's Lockhart speech
3:00 PM Consumer Credit

Companies reporting earnings today »

Source: http://seekingalpha.com/article/4035151-wall-street-breakfast-great-golden-arches-china