The Low Down on the Economic Performance of Equities

Judging from the recent performance of the Dow Jones Industrial Average, analysts believe there is reason to be concerned. For starters, Q1 2016 has been anything but memorable for traders. US stocks have been declining in April with increased anxiety about the upcoming corporate earnings reports from major US corporations. Among others, Pfizer, JP Morgan, Morgan Stanley, Apple, Bank of America and scores of other listed companies will be releasing lackluster earnings reports. This is having a destabilizing effect on equities markets across the board, from the S&P 500 index to the NASDAQ and the Dow Jones Industrial Average. Beginning on 11 April, quarterly earnings reports will be released and there is an expectation of at least a 7.1% decline in gross earnings for companies listed on the S&P 500 index. This decline is year on year from Q1 2015 through Q1 2016.

Multiple analysts and forecasters are expecting the declines to be in the region of 7% – 10% across the board, with financial sector stocks taking a hammering. This is already evident in the preliminary estimations by leading entities like Zacks Investment Research, Thomson Reuters, and scores of others. It should be pointed out that there has been a substantially increased widening in the US trade balance in February to $47.1 billion. With inflation-adjusted factors in effect, the trade deficit is now $63.3 billion, a 1-year high. The US GDP has been revised sharply lower as a result of these worrying statistics. Depending on which type of indicators you’re looking at, the moving average convergence divergence (MACD) indicates bearish sentiment for the Dow Jones Industrial Average, while the parabolic indicators show that there is room for upward movement. Based on the aforementioned economic realities, we can get to work understanding what analysts are projecting for the week ahead.

1 – Indices: Oil Could Assist the DJIA