Stocks Closed Mostly Lower Yesterday, But On Pace To Close Higher For The Week The big three indexes closed moderately lower yesterday. The Nasdaq was the biggest decliner giving up -0.89%. But not so bad after Wednesday's 2.45% gain. The small-cap Russell 2000 and mid-cap S&P 400 were both higher, with small-caps adding 0.15% to Wednesday's 1.99%, while mid-caps added 0.77% to Wednesday's 1.29%. Like yesterday, we saw plenty of positive earnings surprises from big banks in the morning. But the response was more muted. Nonetheless, Bank of America posted a positive EPS surprise of 6.49%. (They were down -0.98% afterwards.) Morgan Stanley posted a positive EPS surprise of 34.6%. (They were up 4.03%.) PNC Financial posted a positive EPS surprise of 14.2%. (They were down -1.95%.) And U.S. Bancorp posted a positive EPS surprise of 0.94%. (They were down -5.64%.) It wasn't only banks reporting yesterday. Before the open, Taiwan Semiconductor posted a positive EPS surprise of 3.70%, and a positive sales surprise of 1.91%. That translated to a quarterly increase in net income of 57% vs. this time last year, and a sales growth of 38.8%. They were up 3.86%. Today we'll hear from State Street Financial, Huntington Bancshares, and Regions Financial. We'll also get earnings from energy giant Schlumberger, and construction supply company Fastenal. Next week, earnings season officially begins on Wednesday, 1/22, when Alcoa reports after the close. But unofficially earnings season has already begun and it's off to a solid start. In other news yesterday, Weekly Jobless Claims rose 14,000 to 217,000 vs. estimates for 212,000. The 4-week moving average eased to 212,750 vs. last month's 213,500. Retail Sales rose 0.4% m/m vs. last month's 0.8% pace and views for 0.5%. Ex-Vehicles it was up 0.4% vs. last month's 0.2% and estimates for 0.4%. Ex-Vehicles & Gas it was up 0.3% vs. last month's 0.2% and the consensus for 0.4%. The Philadelphia Fed Manufacturing Index shot up to 44.3 from last month's -10.9 and expectations for -7.0. Business Inventories were up 0.1% m/m, in line with last month's pace and the consensus. Manufacturing Inventories were up 0.3% vs. last month's -0.1%. Retail Inventories were up 0.2% vs. last month's 0.2%. And Wholesale Inventories were off by -0.2% vs. last month's 0.0%, but in line with views. And the Housing Market Index improved to 47 from last month's actual and estimate of 46.0. Today we'll get the Housing Starts and Permits report, Industrial Production, and the Baker Hughes Rig Count Report. After this week's softer-than-expected inflation reports, the markets breathed a sigh of relief. It's unlikely to have any effect on the next FOMC Announcement in two weeks on January 29. Odds are currently at 97.3% that they won't cut at the next meeting. But it could have an impact on what the Fed does on March 31 (they don't meet in February). But we'll have several more inflation reports and two more employment reports before March's meeting. Next week, the new Administration comes in. And the President is expected to sign roughly 100 executive orders on Day One. Of particular interest will be executive orders regarding tariffs. We'll also see if there's any new details on what the legislative agenda will look like and what will be focused on first. Inauguration Day is Monday, 1/20. The markets will also be closed on Monday in observance of Martin Luther King Jr. Day. With one more day to go, all of the indexes are on pace to close higher for the week. We'll see if they can extend their gains today. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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