Spending Bill In Focus

Both on the Martin Luther King birthday holiday Monday and in Tuesday’s pre-market open, we saw stock index futures, particularly on the Dow, up big. This got market participants salivating ahead of the holiday-shortened week, and as fresh Q4 earnings results hit the tape — mostly containing good news so far.

The 30-company Dow Jones Industrial Average swung nearly 400 points yesterday — from up early 283 to down 100 by the afternoon, only to recover just slightly in the red by close. There were no major geopolitical cataclysms to blame, no collapse in any important commodity (save for bitcoin, but many would argue this doesn’t constitute “important” or necessarily a “commodity”). Even oil prices, touching $70 per barrel for the first time in ages, dipped a bit, but were fundamentally supported at still-profitable levels.

Some point to the difficulties Congress faces in passing a Spending Bill to keep the U.S. government from shutting down. This would indeed amount to a “big deal,” but as Zacks Executive VP Kevin Matras discusses in his latest Profit From the Pros piece, there are still ways lawmakers can kick that can down the road a bit.

Many analysts consider the current market to be in the upper realms of its overall trading ranges. The Dow surpassing 26K in what seems like a record amount of time may be contributing to the idea that perhaps some additional profit-taking — such as we saw at times last month, though December overall was positive — is in order. Thus, as investors look for opportunities to book profits, we might expect a bit more volatility in 2018 trading than we saw last year (which was almost completely non-existent).

Anyway, we see this morning the stock market indexes once again climbing up well into the green: the Dow is currently +129, the Nasdaq +32 and S&P 500 +11. As they say, “If at first you don’t succeed, try, try again.”

Q4 Earnings Roll On

Zacks Rank #1 (Strong Buy)-ranked Bank of America (NYSE:BAC) beat earnings and revenue estimates, topping bottom-line expectations by 3 cents to 47 cents per share. Revenues of $21.4 billion squeaked above the $21.3 billion we had been looking for. These results were augmented by a one-time charge based on the new Tax Act to the tune of $2.9 billion, or 27 cents per share. For more info on BAC’s earnings, click here.

Goldman Sachs (NYSE:GS) far outpaced the Zacks consensus, posting $5.68 per share compared to the $4.90 we had expected. $7.8 billion in quarterly revenues beat the $7.6 billion we estimated, though were down from the $8.2 billion in the year-ago quarter. Goldman CEO Lloyd Blankfein lauded the new tax plan, written partly by former Goldman alums Gary Cohn and Steve Mnuchin, although it too took a multi-billion-dollar one-time charge in the quarter. For more info on GS’s earnings, click here.