Will the Bears Claw Back Bulls' Gains?

Tradenet Weekly Report 22-26.5.2017 Will the Bears Claw Back Bulls' Gains? [Download full Report]( Stocks ended slightly down last week, after a sharp fall on Wednesday on the background of concerns that Trump's complicity in illicit involvement with Russia was again entering the limelight. With that said, on Friday, traders' concerns about Trump being impeached were soon forgotten, transplanted by hope that a special investigative counsel would quell the waters. But then, late on Friday, headlines started streaming that former FBI head, James Comey, had agreed to appear before a Senate Committee in regards to the above, fanning anxiety that's likely to resurface this week. When considering that S&P 500 companies are on the verge of recording their strongest growth in 6 years, it could very well be that the weak dollar could save the day by preserving earnings momentum, supporting stock prices over the coming weeks. After a dramatic week in Washington that rattled financial markets, one positive development for stock investors could be the weak dollar, which could in turn drive the earnings of multinational American-based firms with large overseas operations. The dollar dropped 0.5% against a basket of major currencies last Wednesday after reports that U.S. President Trump tried to interfere with an investigation of the former National Security Counselor, Flynn, who had illegal dealings with Russia. The renewed exposure whet bears' appetites, sending the S&P 500 to its biggest losing day in 8 months, the index ending off on Wednesday by almost 2%. The dollar, in turn, recorded its biggest losing week of the year – and is now trading off 5% year-to-date, in effect, shedding all of the ground gained since the elections. Dollar movement can be said to be of significance for the international firms that are based in the United States. The stronger the greenback is against other currencies, these firms' overseas sales are less vulnerable – the higher revenues then translated back into U.S. dollars. Q1 earnings reports pumped up investors' confidence in the stock market, the market having reached a historic higher earlier in the month, even in light of the events on Capitol Hill which had threatened the ability of President Trump to execute his election campaign the likes of a tax cut and massive infrastructure spending, and a scaling back of regulations. All of these hopes had helped ignite the market rally that started back in mid-November of last year. With over 90% of S&P 500 companies having reported, Q1 earnings are on track to record growth of 15.2%; Q2 earnings are expected to rise 8.5%, but that could still change in keeping with fluctuations in the dollar. The dollar is down 3.2% for Q2 as of now. Companies with substantial overseas activity already proved themselves in the face of a weakening dollar in Q1. Of the S&P 500 companies with over half of their revenues coming from overseas sales, earnings growth on average came to 13.5%. In contrast, companies laying claim to more than half of their revenues coming from local U.S. markets, saw more modest earnings growth of 10.6%. A glimpse at the S&P 500 shows the index having climbed 6.5% on the year, the Russell 2000, where most of the companies make most of their revenues from the local U.S. market, having risen only 1%. The Fed will be at center-stage on Wall Street this week, many a banker speaking with their rhetoric being all the more important after Saint Louis Fed president, James Bullard, said on Friday that the Fed's rate hike plans seem too aggressive. The minutes from the latest Fed meeting - which was held on May 3rd – will be released on Wednesday, though it seems that the quick-fire market developments, and more importantly, the uncertainty revolving the investigation of Trump's election campaign, make the minutes seem a little out of date. This week, President Trump will be busy with a whirlwind tour of the Mediterranean, visiting Saudi Arabia, Israel and Italy, in his first trip abroad. Markets have their eyes peeled on his conduct internationally, seeing that his unconventional comportment will express itself in diplomatic circles and his dealings with world leaders. Crude is expected to be in focus this week, with the OPEC decision about extending the current production cut expected for Thursday. Future crude contracts succeeded in climbing past the $50 barrel level on Friday, on the background of expectations that producers will sign a larger deal than the last one signed half a year ago. A number of key reports will be released this coming week, including a revision of the Q1 growth (GDP) on Friday. Also, be on the lookout for durable goods order numbers. Focal points on the reporting front will be Hewlett-Packard (HPQ), Tiffany's (TIF) and Best Buy (BBY). In Summary for the Week: The Dow Jones fell 0.59%. The S&P 500 recorded a decline of 0.28%, the NASDAQ ending off 0.55%. Have a great trading week! --------------------------------------------------------------- [Download full Report]( for any further information, please do not hesitate to contact us at: support@tradenet.co.uk --------------------------------------------------------------- This e-mail was sent to {EMAIL} by support@tradenet.co.uk. ., ., ., . If you no longer wish to receive commercial e-mail messages from support@tradenet.co.uk, please select the following link: [Remove](.