Weighing Global Growth Concerns And Corporate Earnings

CHARTINGInvestors are paying close attention to corporate earnings this week to gauge the strength of the U.S. and global economy after the market has seen increased volatility and broad based selling  in recent days.

Nearly 10 percent of companies in the S&P 500 by market cap are reporting earnings later today including AMD, Auto Nation, Capital One, Chipotle, Google, Microsoft, Morgan Stanley, Verizon, PepsiCo, IBM, and Union Pacific.

More selling pressure has entered the market this week due to new concerns about a global slowdown.

Last week saw U.S. retail sales dropping 0.4% for March while U.S. payrolls for March grew only by 88,000, representing the smallest payroll gain in nine months.

Economists are still debating whether those weak economic numbers combined with Monday’s weaker than expected GDP for China at  7.7 percent in the first quarter and 7.5 percent GDP growth target in 2013 are a sign that the world’s two largest economies are in a small correction or heading into a new era of slow growth.

Although the Federal Reserve’s monthly $85 billion bond buying program (QE3) has provided the market with a cushion and impetus to move higher, U.S. fiscal policies related to  across the board “sequester” cuts along with the 2 percent payroll tax increase in 2013 may underpin and dampen U.S. growth prospects for the remainder of the year even with gas prices expected to continue sliding through late spring.

Despite those fiscal headwinds, U.S. equity markets have already posted solid gains in the first quarter of 2013 and mostly shrugged off European volatility related to the Italian elections and banking debt problems in Cyprus.

Thursday Economic Calendar

8:30  Weekly Initial Jobless Claims for 4/13: Briefing Forecast: 350 K. Market expects 355 K  According to briefing.com

8:30 Continuing Claims for 4/6: Briefing Forecast: 3060 K. Market expects 3068  According to briefing.com

10:00: Philadelphia Fed April Manufacturing Survey. Briefing Forecast 3.0.  Market expects: 2.5 According to briefing.com.

10:00: March Leading Index

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