Stocks start fourth quarter on bullish footing, but view of economy could be muddied

Stocks finished the end of the third quarter with solid gains, and the S&P 500, Nasdaq and Russell 2000 were at all-time highs. The S&P rose to 2,518, up 0.7 percent for the week and a 3.9 percent gain for the quarter. Nasdaq was up 5.8 percent for the quarter to 6,495, and the Russell was up 5.3 percent for the quarter at 1,491. The Dow was up 4.9 percent for the quarter but off its high at 22,400.

Strategists say the fourth quarter could also be bullish for stocks, which defied all expectations for a correction during the late summer. The Republican tax plan could keep the market buoyed, though some analysts say if there is disagreement over the plan, it could trigger a slight pullback.

“Earnings season will start in the week after, and that’s when things should get a little more volatile. We had a broad-based rally that had leadership from banks, small-caps and even tech that got beaten up had a potent rebound,” said Redler. “There’s not really too many holes in the tape for now.”

Bond yields edged higher in the final days of the third quarter, but the 10-year Treasury note, yielding 2.33 percent, was only slightly higher than the 2.30 percent it was at on June 30.

Michael Schumacher, director of rate strategy at Wells Fargo, is among those who say the Treasury market may have hit a turning point toward higher yields in the past week, as the Fed re-emphasized plans to hike interest rates and the much-anticipated tax plan was unveiled.

Schumacher said he will now be watching the Fed speakers because the economic data is too murky due to the hurricanes.

“At least until December, the data is a mess. I think you listen more to the policymakers and focus less on the data. … If you see fine-tuning of the reading the Fed wants to give the markets, I would guess it’s somewhat hawkish,” he said.

What to Watch


Earnings: Cal-Maine Food

9:45 a.m. Manufacturing PMI

10:00 a.m. ISM manufacturing

10:00 a.m. Construction spending

2:00 p.m. Dallas Fed President Robert Kaplan


Earnings: Lennar, Paychex, IDT

Vehicle sales

8:30 a.m. Fed Gov. Jerome Powell discusses regulatory reform


Earnings: PepsiCo, Monsanto, Accuity, RPM International

8:15 a.m. ADP employment

9:45 a.m. Services PMI

10:00 a.m. ISM nonmanufacturing

2:15 p.m. Fed Chair Janet Yellen makes introductory remarks at St. Louis Fed community banking conference


Earnings: Costco, Yum Brands, Constellation Brands, The Container Store

8:30 a.m. Initial claims

8:30 a.m. International trade

9:10 a.m. Fed Gov. Jerome Powell at New York Fed on best practices

9:15 a.m. San Francisco Fed President John Williams at St. Louis Fed banking conference

9:30 a.m. Philadelphia Fed President Patrick Harker at Dallas Fed event on workforce

10:00 a.m. Factory orders

4:30 p.m. Kansas City Fed President Esther George at Dallas Fed event on workforce


8:30 a.m. Employment report

9:15 a.m. Atlanta Fed President Raphael Bostic

10:00 a.m. Wholesale trade

12:15 p.m. New York Fed President William Dudley in Brooklyn on monetary policy

12:45 p.m. Dallas Fed’s Kaplan at “Investing in America’s Workforce” conference

1:50 p.m. St. Louis Fed President James Bullard in St. Louis

3:00 p.m. Consumer credit

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