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Things to know this week

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Corporate earnings and economic data, scheduled for release this week, will test investors after the stock market’s latest record-breaking rally.

Traders have been pricing on the prospect of a rebound in corporate earnings in line with better-than-expected economic data recently, another round of tightening economic data is expected this week. It was impacted by the latest round of fiscal stimulus and a reversal of greater social distance constraints supporting economic activity.

The company’s first-quarter earnings are likely to benefit from a strong economic backdrop. Over the past several months, analysts have raised the S&P 500̵

7;s earnings per share (EPS) estimate to a record 6.0 percent, according to FactSet data.

And the first-quarter earnings season will kick off with quarterly reports from big banks, which have seen the fastest revisions to profit estimates. In fact, the financial sector saw the second-largest increase in bottom-to-top EPS estimates of all 11 sectors in the S&P 500, according to FactSet, second only to the energy sector. Financial earnings per share estimates were revised, up 13.1%, the second-largest increase in the segment since FactSet began tracking metrics in 2002.

The rising bank profit outlook coincided with the rapidly rising Treasury yields as expectations for economic growth rose. The benchmark’s 10-year bond yield has risen to more than 70 basis points for the year-to-year, with the highest interest rates boosting bank earnings coming from their core credit business. The S&P 500’s financial group earned more than 18% in the same period a year ago, or doubled the broader market return of the broader market due to a recent turnover into cyclical stocks, with The strong rebound in the banking sector’s performance.

Banks, which reported quarterly results this week – including JPMorgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC) and Morgan Stanley (MS) – likely reflect gains from the environment. With this higher rate The big banks’ first-quarter results are likely to be boosted once again by trading activity as the stock market rallies and volatility in bond markets so far this year. Bond trading revenue rose the most in at least a decade in bond trading divisions at Goldman Sachs, Citi, Morgan Stanley, JPMorgan and Bank of America last quarter, according to Axios analysis.

However, with recent increases in well-known investor rates and higher next-leg prices for stocks, the bank will likely need a new driver, said Deutsche Bank analyst Matt O’Connor. The cycle has already lost momentum as steady rates spur a revival in tech stocks and growth.

“The next major catalyst for banking stocks is likely the return of credit growth. Many view credit growth as one of the long-term and higher-quality drivers of banking revenues, rather than the rise from credit growth.” Higher interest rates, ”O’Connor wrote in a recent note. “Loans weaker than expected in 1Q18 and may stagnate again in 2Q / due to a downward trend from fiscal stimulus measures. (And tax return) and from [the] The introduction of the COVID-19 vaccine will be a good part of the quarter. (Likely to drive the investment expected to increase to Q3 or 4Q) ”

“But we are confident that loan growth will improve and expect a sharp increase in 4Q as the promising holiday season closes acquisitions and hopes that companies will invest to expand and capitalize on what they are doing.” It should be a multi-year economic expansion, ”he said.

A major source of credit growth is likely to come from both consumer spending during the post-epidemic recovery and from businesses looking to boost their deal activity and corporate investment. The uncertainty about the epidemic is diminishing.

Retail sales

A key print on consumer spending will be published Thursday, with consumption ready to be fueled by delivery of checks, stimulus and warming spring weather.

Consensus economists expect the Commerce Department’s March retail sales report to increase 5.4 percent in March, according to Bloomberg data.This will be followed by a 3 percent drop in sales in February due to fluctuating weather conditions and the impact. That fell from a $ 600 stimulus check in January led to a shift in month-to-month spending. Still, retail sales were still 6.3 percent higher in February in the same month of 2020, with consumers spending part of the economy to return as quickly as possible to pre-epidemic levels.

NEW YORK, NY - April 06: People walk among luxury retail stores in Manhattan on April 6, 2021 in New York City.New York Governor Andrew Cuomo and lawmakers reach a preliminary agreement to raise taxes. To the wealthiest residents to meet the scarce budget  Passing taxes will make state billionaires pay the highest national income rate (Photo by Spencer Platt / Getty Images).

People walk by luxury retail in Manhattan on April 6, 2021 in New York City. (Photo by Spencer Platt / Getty Images).

“The most recent round of checks on the stimulus, $ 1,400 per certified person, totaling $ 410 billion, began in mid-March, supporting another increase in spending,” said Lewis Alexander. The Nomura economist wrote in a note on Friday. “For non-core components, credit card information for food service spending shows an accelerating acceleration as warmer temperatures across the United States and state and local governments have eased restrictions on activities.

“After March, spending should be continually supported by the reopening and continued disbursement of stimulus checks,” he added. “That said, in the coming months, there may be at least a fair payback following the same surge in spending stimulus as the January-February period.”

As Bank of America reported, March’s retail sales could rise faster than consensus economists had predicted.

‘According to the BAC card data collected, retail sales from cars increased 11.1%. [month-over-month] In March, which showed the reopening stimulus effects and improved weather conditions. “This should be in place for a very strong census report,” wrote economist Michelle Mayer. Of course, we see the census upside down against our 11% growth. ”

In the seven days ended March 20, Bank of America credit and debit card spending increased 45% from the same period a year ago and 23% from the same period in 2019, where most companies are the result. From the disbursement of economic stimulus checks The latest card spending data from JPMorgan Chase confirms these trends: Chase card spending increased about 24% year-over-year in the seven days ended March 19, accelerating from a lower rate of growth. 10% in January

Economic calendar

  • Monday: March monthly budget statement (- expected $ 720.0 billion – $ 310.9 billion in February)

  • Tuesday: NFIB Small Business Optimism, March (98.0 expected, 95.8 in February); Consumer Price Index (CPI) month to March (expected 0.5%, 0.4% in February); CPI excluding food and energy, month-to-March (expected 0.2%, 0.1% in February); CPI year on year in March (expected 2.5%, 1.7% in February); CPI excluding food and energy year on year in March (expected 1.5%, 1.3% in February); Average Weekly Average Year to Year March (4.1% in February) Average Hourly Earnings Yearly March (3.4% in February)

  • Wednesday: MBA Mortgage Application, April 9 (-5.1% during the previous week); Import price index month-to-March (expected 1.0%, 1.3% in February); Import price index year on year in March (3.0% in February); Export Price Index Month-to-March (expected 1.0%, 1.6% in February); Export Price Index Year to Year in March (5.3% in February); The Federal Reserve publishes the Beige Book.

  • Thursday: Number of first-time jobless claims in the week ended April 10 (estimated 700,000 and 744,000 in the preceding week), ongoing claims, the week ended April 3 (estimated 3.700 million, 3.734 million in the previous month). ); Retail sales in advance, month-to-March (expected 5.1%, -3.0% in February); Retail sales excluding cars and gas in March (expected 6.5%, -3.3% in February); Empire Manufacturing Index, April (expected 18.0, 17.4 March); Philadelphia Business Outlook Index Feed April (expected 2.7%, -2.2% in March); Manufacturing Production Month-to-March (expected 2.7%, -2.2% in February); Capacity utilization in March (expected to be 75.6%, 73.8% in February); Inventories of the February business (expected 0.5%, 0.3% in January); NAHB Housing Market Index April (84 expected 82 March); Total Net TIC Flows, February ($ 106.3 billion in January); Net long-term TIC flows in February ($ 90.8 billion in January).

  • Friday: Housing starts in March (1.602 million, expected 1.421 million in February); Construction permits in March (expected 1.750 million, 1.720 million in February); University of Michigan Consumer Confidence Survey, Preliminary April (89.0, 84.9 expected in March).

Income Calendar

  • Monday: without

  • Tuesday: Fastenal Co (FAST) before market opens

  • Wednesday: JPMorgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC), Bed Bath & Beyond (BBBY) before the market opens.

  • Thursday: Bank of America (BAC), Charles Schwab (SCHW), Truist Financial Corp (TFC), The Progressive Corp (PGR), US Bancorp (USB), UnitedHealth Group (UNH), PepsiCo (PEP), Delta Air Lines (DAL. ), BlackRock (BLK), Rite Aid (RAD), Citigroup (C) before the market opens; Alcoa (AA) after market close

  • Friday: Morgan Stanley (MS), Bank of New York Mellon (BK), PNC Financial Services Group (PNC), Kansas City Southern (KSU), Citizens Financial Group (CFG), State Street Corp (STT), Ally Financial (ALLY). Before the market opens

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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