US Reporting Season Defies Talk of a Global Recession in 2019

By Dale Gillham | Published 26 August 2019

In this week’s US Stock Market Report Wealth Within, chief analyst Dale Gillham chats with Jim Beach about the US China trade war, interest rates and the latest on the reporting season in the US.

President Trump announced last week an additional tariff increase of 5 percent on imports from China and in doing so escalated the trade war between the two nations. This latest move came just hours after Trump retaliated at China’s plans to inflict duties on US$75bn of US goods.

Once again, this move sparked fears of a global recession, however, in my experience a global recession is unlikely, and the more people talk about it, the less likely it will occur.

Reporting season is well underway, which generally means you will see increased volatility in the stock market although so far reporting season has been relatively good and analysts are happy.

Last week Nordstrom’s stock soared after the company released a mixed earnings report that showed weakening sales, although it beat the analysts profit estimates. Its stock rose around 5 percent in extended trading, after initially jumping more than 21 percent, closing up 12.84 per cent for the week.

Lowe’s shares also surged last week after the home improvement retailer’s second-quarter earnings report beat Wall Street forecasts and topped rival Home Depot on same-store sales growth in the U.S. The report exceeded analyst estimates on earnings, revenue and same-store sales with Lowe’s closing up 13.28 percent for the week

Target’s second-quarter earnings report beat every estimate forecast by Wall Street, sending its shares to a record high. The retailer’s quarterly profit jumped by 17 percent, as its in-store pickup and same-day shipping services successfully drew more customers. It also raised its outlook for the rest of the year with Target closing up 22.90 percent for the week.

Home Depot released mixed earnings that didn’t appear to haunt investors. Home Depot’s fiscal second-quarter sales missed analysts’ expectations, and the company lowered its sales outlook for the year amid fears that the trade war will slow consumer spending. But its earnings topped estimates, which analysts are claiming will position Home Depot well for the remainder of 2019. Home Depot closed up 6.79 percent for the week.

In late July, Fed Chairman, Jerome Powell indicated that it may impose further rate cuts after cutting rates for the first time in ten years. Last week President Trump stated that the Fed was more dangerous to the US than the China trade war, which I think is quite an extreme thing to say. The Fed is one thing Trump can’t control, and the prospect of having two interest rates falls on Trumps watch may indicate that economically he is not doing as well as he would like everyone to believe. 

Now let’s look at the S&P 500 Index and this stocks of interest for the week. Watch the video to find out more.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the award winning book Accelerate Your Wealth—It’s Your Money, Your Choice.

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