Earnings Boost

Equities continued to rally on the strength of corporate earnings and the prospect of tax cuts to be proposed shortly by President Trump. So far, 360 companies in the S&P 500 having reported fourth quarter earnings which are set to rise 5% from the year-earlier period, according to FactSet. Expectations had been for earnings to increase 3.2%. For the week, the DJIA was up 1.13%, the S&P 500 rose 0.87% and the NASDAQ 1.24%. International stocks were mixed the EAFE index was down slightly (-0.02%) but emerging markets continued their strong performance by advancing 1.25% and are the best performing equity group up 7.93% YTD. Fixed income also was positive as the yield on the 10 year US Treasury fell from 2.49% to 2.41%.

This week, look for reports on inflation, retail sales and housing starts but the big news this week may come as Fed Chairwoman Janet Yellen testifies before Congress on Tuesday and Wednesday. Investors will be looking for hints as to when the FOMC will raise rates.

“If you fell down yesterday, stand up today.”  –  H.G. Wells