Q3 earnings season unofficially began on Tuesday with a slew of big bank and big-name reports.
- The early read is favorable, as companies top low expectations.
Headlines bounced back and forth between optimism and pessimism last week, and movement in the market mirrored headlines. But by week’s end, the U.S. and China agreed in principle to a trade deal. A late Friday Wall Street Journal headline summed it up this way: “Trump Says U.S. Reaches ‘Substantial Phase One Deal’ With China.”
The economic fundamentals have taken a backseat to headlines for much of the year, much more than has historically been the case.
Trade headlines helped drive shares higher earlier in the year.
- The pullbacks in May and August occurred amid an escalation in tensions.
- June/July’s rally occurred amid more positive trade headlines.
- Economic concerns linger, but more recent action has been influenced by headlines.
The unemployment rate fell to a 50-year low in September, dropping 0.2% to 3.5% per the U.S. BLS. It ties the low last reached in December 1969. It seemed appropriate to lead off with a graphic that highlights the history going back to 1950.