The volatility of last week looks like extending into Monday morning trading. The Dow Jones recorded a triple-digit move each day last week and is setting up for a big move higher on Monday. The ECB rumour mill is boosting global risk-assets and pressuring the euro over possible plans for QE in the Eurozone.
US stocks plummeted back into the red for 2015 after the US unemployment report on Friday showed the number of jobs created exceed expectations but wages decline in December. There had been some concern going into the NFP over the declines seen after the previous month’s report. The fall in wages proved the catalyst needed to sell the initial strength after the data came out.
Alcoa Inc (NYSE:AA) unofficially kicks of US fourth quarter earnings season on Monday but the focus for the week will be on reports from big banks Bank of America Corporation (NYSE:BAC), JPMorgan Chase & Co (NYSE:JPM), Goldman Sachs Group Inc (NYSE:GS), Wells Fargo & Company (NYSE:WFC) and Citigroup Inc (NYSE:C).
The worry for Q4 earnings is that US multinationals start to really feel the bite in their foreign earnings from the stronger US dollar. The US dollar index has been rallying since the summer and is now at 12-year highs. The size and the duration of the move higher in the US dollar cannot help but hurt US exporters and help importers leading to a readjustment of winners and losers in Q4 earnings.
The energy sector has been crushed in the past three months; Q4 earnings will offer some ideas on how deserved the stock price declines have been.
Futures suggest the:
S&P 500 will open 9 points higher at 2,053 with the
Dow 30 expected to open 87 points higher at 17,824 and the
NASDAQ Composite 20 points higher at 4,233.
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