Stocks Manage Gains in Friday's Session

Charles Schwab: On the Market

Posted: 1/20/2017 4:15 PM ET

Stocks Manage Gains in Friday's Session

U.S. stocks finished Friday's regular session with gains as Donald Trump was sworn in as the 45th President of the United States. In earnings news, Dow members American Express, IBM, GE and Procter & Gamble reported mixed results. Treasuries were mostly higher, though the domestic economic calendar was void of any releases today. Gold and crude oil prices were higher and the U.S. dollar declined.

The Dow Jones Industrial Average (DJIA) increased 95 points (0.5%) to 19,827, the S&P 500 Index was 8 points (0.3%) higher at 2,271 and the Nasdaq Composite gained 15 points (0.3%) to 5,555. In moderate-to-heavy volume, 973 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq. WTI crude oil increased $1.10 to $53.22 per barrel and wholesale gasoline added $0.04 to $1.57 per gallon. Elsewhere, the Bloomberg gold spot price ticked $2.99 higher to $1,207.84 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—dipped 0.3% to 101.15. Markets were lower for the week, as the DJIA decreased 0.3%, the S&P 500 Index shed 0.2% and the Nasdaq Composite declined 0.3%.

Dow member American Express Co. (AXP $76) reported 4Q earnings-per-share (EPS) ex-items of $0.91, below the FactSet estimate of $0.99, with revenues declining 4.0% year-over-year (y/y) to $8.0 billion, above the projected $7.9 billion. AXP issued 2017 earnings guidance that was above estimates. Shares finished lower.

Dow component International Business Machines Corp. (IBM $171) posted 4Q EPS ex-items of $5.01, above the forecasted $4.88, as revenues dipped 1.0% y/y to $21.8 billion, compared to the expected $21.6 billion. IBM issued 2017 profit guidance that topped estimates and shares moved higher.

Dow member General Electric Co. (GE $31) announced 4Q earnings ex-items of $0.46 per share, roughly in line with forecasts, with revenues decreasing 2.0% y/y to $33.1 billion, below the expected $33.9 billion. GE noted that it continues to invest in the industrial internet. Shares closed lower.

Dow component Procter & Gamble Co. (PG $87) achieved fiscal 2Q EPS ex-items of $1.08, two cents north of projections, as revenues were flat y/y to $16.9 billion, exceeding the estimated $16.8 billion. PG raised its 2017 guidance for organic sales growth—excluding acquisitions and divestitures and foreign exchange fluctuations—and maintained its core EPS outlook. Shares traded nicely higher.

Bristol-Myers Squibb Co. (BMY $49) saw heavy pressure after the company announced that it will not seek accelerated regulatory approval for its first-line lung cancer treatment based on a review of data available at this time.

Economic calendar goes quiet as inauguration day arrives

Treasuries were mixed with the economic calendar void of any major reports today. The yield on the 2-year note declined 3 basis points (bps) to 1.19%, the yield on the 10-year note decreased 1 bp 2.47% and the 30-year bond rate was nearly unchanged at 3.05%.

The U.S. dollar was little changed and Treasury yields were higher in a choppy holiday-shortened week, with political uncertainty flaring up amid comments ahead of the inauguration of President Donald Trump, while U.K. political concerns resurfaced as British Prime Minister May offered details of her nation's Brexit plans. Schwab's Vice President of Legislative and Regulatory Affairs, Michael T. Townsend and Vice President of Trading and Derivatives, Randy Frederick offer their latest video, How Could the Items on the Republican Agenda Impact Investors?, at www.schwab.com/insights. Follow Schwab on Twitter: @schwabresearch. Moreover, the European Central Bank (ECB) held its monetary policy stance, including its asset purchase program, unchanged, while Federal Reserve Chairwoman Janet Yellen preserved expectations of more rate hikes this year. Against this backdrop, U.S. economic data remained relatively positive, headlined by a rebound in industrial production, a jump in housing starts, accelerated growth in manufacturing activity in Philadelphia, a drop in jobless claims, and the Fed's Beige Book noting growth across the nation continued. Finally, earnings season continued to ramp up, with results mostly favorable but being met with elevated expectations.

Schwab's Chief Fixed Income Strategist, Kathy Jones discusses the bond markets and the recent rally in the greenback in her articles, Anatomy of a Bond Bear Market: What to Look For When Yields Rise and Will the U.S. Dollar Bull Market Continue in 2017?, at www.schwab.com/marketinsight. Follow Kathy on Twitter: @kathyjones.

With the stock markets dipping this week from record levels, Schwab’s Chief Investment Strategist Liz Ann Sonders offers her latest article, Not Fade Away: Will High Consumer/Business Confidence Fade or Persist?, at www.schwab.com/marketinsight and be sure to check out our article, The Trump Effect: Can the Post-Election Rally Continue at www.schwab.com/insights. Follow Liz Ann on Twitter: @lizannsonders.

Next week, earnings season will accelerate to give us further insight to whether earnings growth can meet these lofty expectations, while guidance will likely garner heavy attention as consumer, business and investor confidence has jumped on optimism that President Trump's administration and Republican controlled Congress can deliver on proposed policies. Also, the U.S. economic calendar will bring key releases of existing and new home sales, the first look (of three) at 4Q GDP,durable goods orders and the final University of Michigan Consumer Sentiment Index for January.

As noted in the Schwab Market Perspective: A Perfect Mix?, the conditions for a continuation of the long-running equity bull market appear to be intact. The recent digestion of gains since the election is a healthy process as it forestalls a potentially dangerous "melt-up" scenario, at least for now. Economic data and corporate earnings growth are conspiring with a boost in consumer and business confidence to ignite "animal spirits." Add in a Federal Reserve that is slowly normalizing monetary policy, but still remains accommodative, and we see a good mix for further equity gains. Manufacturing has rebounded around the globe, and could continue on a positive trajectory in the first half of 2017. Read more at www.schwab.com/marketinsight.

Europe and Asia mixed

European equities finished mixed, with the global markets awaiting today's inauguration of U.S. President Donald Trump, while digesting yesterday's unchanged monetary policy decision from the ECB. Oil & gas issues led the way higher as crude oil prices added to yesterday's gains, while healthcare issues moved lower. Basic materials overcame early pressure and were modestly higher in the wake of some mixed Chinese economic reports, headlined by a slightly stronger-than-expected read on 4Q GDP growth. The choppiness in the currency markets persisted, with the British pound remaining volatile, dipping against the U.S. dollar as a sizable miss in U.K. retail sales for December met flared-up Brexit concerns. The euro reversed modestly to the upside versus the greenback, while bond yields in the region traded mostly higher. Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, notes in his latest article, The CURE for a calm Market: Four risks for 2017, that after a calm post-election climb, developments in China, United Kingdom, Russia, and Europe may bring a return of stock market volatility. However, Jeff points out that better and broader global economic growth should help offset these risks and result in stock market gains for 2017. Read more at www.schwab.com/oninternational, where you can also find Jeff's commentary, 5 Reasons International Stocks May Underperform In 2017. Follow Jeff on Twitter: @jeffreykleintop.

Stocks in Asia finished mixed following a plethora of mixed Chinese economic data and ahead of the inauguration of U.S. President-elect Donald Trump. Japanese equities rose as the yen saw choppy action following comments from Fed Chair Yellen and coming off yesterday's drop. The global currency markets have been volatile amid a host of catalysts, notably political uncertainty in the U.S. and U.K., and Schwab's Director of International Research, Michelle Gibley, CFA, offers her latest article, Currency Hedging: 5 Things You Need to Know. Mainland Chinese stocks advanced and those in Hong Kong declined following the plethora of economic data and posturing amid government actions toward liquidity in the financial markets ahead of the Lunar New Year holiday at the end of the month. China's 4Q GDP came in at a 6.8% y/y pace of growth, ticking higher from the 6.7% expansion posted in 3Q, where economists had expected it to remain. Also, the nation's retail sales topped expectations, though fixed asset investment and industrial production both slightly missed forecasts. The GDP report adds to a recent string of data that has suggested stabilization in the world's second-largest economy, and Schwab's Michelle Gibley, CFA, delivers analysis of China in her article, 5 Big Risks Posed by China (And Why They Shouldn't Crash Global Markets in 2017) read both these articles at www.schwab.com/oninternational.

Australian securities fell as financials and basic materials listings saw pressure. Finally, South Korean equities declined and Indian stocks dropped. Schwab's Michelle Gibley, CFA, offers timely analysis of emerging markets in her latest article, Emerging Markets: Why They Deserve a Place in Your Portfolio at www.schwab.com/oninternational, and be sure to check out our release, Why Your Portfolio Needs International Stocks—Despite 2017 Risks at www.schwab.com/insights.

International reports due out next week that deserve a mention include: Australia—CPI, PPI and trade data. China—Leading indicators and industrial profits. Japan—All industry Activity Index, Leading Index and trade data. U.K.—4Q GDP. Germany—Ifo business climate survey and the Import Price Index. Italy—retail sales, consumer confidence and wage data.

Market Gains in Bumpy Action

Charles Schwab: On the Market

Posted: 11/17/2016 4:15 PM ET

Market Gains in Bumpy Action

U.S. equities finished the trading session with gains in choppy action, as investors weighed elevated Fed rate hike expectations following comments from Chair Yellen, a host of upbeat economic data, and mixed earnings reports. Treasury yields continued their ascent and the U.S. dollar was higher, while crude oil prices dipped and gold was solidly lower.

The Dow Jones Industrial Average (DJIA) rose 36 points (0.2%) to 18,904, the S&P 500 Index gained 10 points (0.5%) to 2,187 and the Nasdaq Composite increased 39 points (0.7%) to 5,334. In moderately-heavy volume, 838 million shares were traded on the NYSE and 2.1 billion shares changed hands on the Nasdaq. WTI crude oil ticked $0.15 lower to $45.42 per barrel, wholesale gasoline was $0.02 higher at $1.34 per gallon and the Bloomberg gold spot price dropped $7.75 to $1,217.24 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.5% higher at 100.95.

Dow member Wal-Mart Stores Inc. (WMT $69) reported 3Q earnings-per-share (EPS) ex-items of $0.98, above the $0.96 FactSet estimate, as revenues increased 0.7% year-over-year (y/y) to $118.2 billion, north of the projected $118.6 billion. 3Q U.S. Walmart same-store sales rose 1.2% y/y, compared to the expected 1.4% increase. WMT issued 4Q same-store sales guidance with a midpoint below forecasts, while raising the low end of its full-year EPS outlook. Shares were solidly lower. 

Best Buy Co. Inc. (BBY $46) posted 3Q EPS of $0.62, well above the estimated $0.47, with revenues rising 1.4% y/y to $9.0 billion, versus the projected $8.9 billion. 3Q domestic same-store sales grew 1.8% y/y, compared to the expected 1.0% increase. BBY issued stronger-than-expected 4Q and full-year profit guidance. Shares rallied.

Dow component Cisco Systems Inc. (CSCO $30) announced fiscal 1Q earnings ex-items of $0.61 per share, north of the expected $0.59, as revenues rose 1.0% y/y to $12.4 billion, topping the forecasted $12.3 billion. CSCO issued softer-than-expected 2Q EPS and revenue guidance. Shares finished solidly lower. 

L Brands Inc. (LB $70) reported 3Q profits of $0.42 per share, exceeding the projected $0.40, on previously reported revenues of $2.6 billion. LB issued 4Q profit guidance that missed the Street's estimates. Shares were higher in choppy trading.

Housing construction activity jumps, jobless claims fall

Housing starts (chart) for October surged 25.5% month-over-month (m/m) to an annual pace of 1,323,000 units, above the Bloomberg forecast of a 1,156,000 unit rate. September starts were upwardly revised to an annual pace of 1,054,000. Starts hit more than a nine-year high, as a surge in multi-family structures was met with a sharp rise in single-family construction. Building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future construction, rose 0.3% m/m in October to an annual rate of 1,229,000, after September's unrevised 1,225,000 rate, and above the expected annual pace of 1,193,000 units.

Schwab's Director of Market and Sector Analysis, Brad Sorensen, CFA, offers a look at the housing market in his latest article, Real Estate Sector: Marketperform, noting positives of low interest rates, an improving economy and supportive apartment trends. However, Brad maintains a marketperform rating on the group, due to possible counterbalancing issues of rising rates and a changing consumer, while the apartment trends could be at an inflection point. Read more at www.schwab.com/marketinsight and follow Schwab on Twitter: @schwabresearch.

The Consumer Price Index (CPI) (chart) was up 0.4% m/m in October, matching estimates, while September's 0.3% increase was unrevised. The core rate, which strips out food and energy, ticked 0.1% higher m/m, below expectations of a 0.2% rise, and matching September's unrevised increase. Y/Y, prices were 1.6% higher for the headline rate, in line with forecasts, while the core rate was up 2.1%, below projections of a 2.2% increase. September y/y figures showed an unrevised 1.5% rise and 2.2% increase for the headline and core rates respectively.

Weekly initial jobless claims (chart) fell by 19,000 to 235,000 last week, below forecasts of an increase to 257,000, as the prior week figure was unrevised at 254,000. The four-week moving average dropped by 6,500 to 253,500, while continuing claims fell by 66,000 to 1,977,000, south of the estimated level of 2,030,000. For a look at employment, see Schwab's Chief Investment Strategist Liz Ann Sonders' article, Welcome to the Working Week: An Update on Jobs, at www.schwab.com/marketinsight and follow Liz Ann on Twitter: @lizannsonders.

The Philly Fed Manufacturing Index (chart) in November declined but remained at a level depicting expansion (a reading above zero) after decreasing to 7.6 from 9.7 in October, compared to estimates of a drop to 7.8.

Federal Reserve Chairwoman Janet Yellen is testifying before the Joint Economic Committee, suggesting that a December rate hike is likely. Yellen noted that a rate hike "could well become appropriate relatively soon," while warning about the risks to financial stability and frequency of tightening monetary policy of holding the fed funds rate at its current level for too long. As noted in the latest Schwab Market Perspective: Is the Fog Starting to Lift?, "full" employment is at least in sight, housing is recovering, economic growth has improved and inflation is heating up. As such, the Fed funds futures markets are pointing to a rate hike at the Fed's final meeting of the year in December. That may remove some uncertainty, but questions will remain as to the path and frequency of rate hikes in 2017 and beyond. We continue to believe the Fed will be able to go slow in normalizing rates, as they have stated they want to do, but signs of rising inflation could force its hand. Read more at www.schwab.com/marketinsight.

Treasuries finished lower following the data and Yellen's comments, as the yield on the 2-year note ticked 2 basis points (bps) higher to 1.02%, the yield on the 10-year note gained 6 bps to 2.28%, and the 30-year bond rate rose 7 bps to 3.00%. For our latest analysis of the rally in bond yields following the surprise election results, see Schwab's Chief Fixed Income Strategist, Kathy Jones' latest article, Change Is in the Air: A Post-Election Look at Bonds at www.schwab.com/onbonds, and follow Kathy on Twitter: @kathyjones.

For more analysis of the election, see Schwab's Liz Ann Sonders' and Senior Vice President with the Schwab Center for Financial Research, Mark Riepe's, CFA, video titled The Election's Over, so What's Next for Markets? at www.schwab.com/insights. Also, Schwab's Vice President of Legislative and Regulatory Affairs, Michael T. Townsend offers his latest article, Could Tax Cuts Really Happen in 2017?, as part of our election 2016 commentary at www.schwab.com/insights/category/election-2016.

Rounding out the week, tomorrow's economic calendar will yield the Index of Leading Economic Indicators, forecasted to have ticked 0.1% higher m/m during October following the 0.2% gain registered in September.

Europe mostly higher, Asia mixed as U.S. election posturing fades

European equities posted a late-day advance to finish mostly higher, with the volatile global market reaction to last week's surprising U.S. election cooling, likely vectoring attention to earnings and economic data and the heightened expectations of a December U.S. Fed rate hike. The plethora of data in the U.S., coupled with comments from Fed Chair Yellen appeared to preserve elevated rate hike expectations. Oil & gas issues were standout winners, despite a modest rise in crude oil prices, while technology, telecommunications and basic materials all moved higher. In economic news in the region, eurozone consumer price inflation came in a bit cooler than expected m/m in October, while the y/y rise matched forecasts. U.K. retail sales jumped more than expected in October. Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, offers a World Tour: An Around The World Look At the Economic Landscape, at www.schwab.com/oninternational and follow Jeff on Twitter: @jeffreykleintop. The euro declined and the British pound was little changed after giving up early gains versus the U.S. dollar, while bond yields in the region were mixed.

Stocks in Asia finished mixed with the recent surprise U.S. election positioning that has ramped up activity in the global markets for the past week continuing to fade, while crude oil prices resumed decline yesterday weighed on the energy sector. Following the past week of U.S. election-fueled market volatility, Schwab's Jeffrey Kleintop, CFA, offers Three Reasons Why Now is Not the Time to Retreat from Global Diversificationand why Your portfolio may be less diversified than you think. Japanese equities finished flat with some choppiness in the yen gaining attention as the Bank of Japan began its first bond market operation since the September decision to change its monetary policy direction to focus on managing the yield curve. For our latest analysis of Japan's monetary policy, see Jeffrey Kleintop's, CFA, article, Going Godzilla: What has the Bank of Japan Unleashed?. Read all these articles at www.schwab.com/oninternational. Meanwhile, stocks in China, South Korea and Australia gained ground, but those traded in Hong Kong and India declined.

Tomorrow's international economic calendar will hold PPI from South Korea and Germany, while the eurozone will report CPI figures.

Stocks Able to Hold Gains

Charles Schwab: On the Market

Posted: 10/14/2016 4:15 PM ET

Stocks Able to Hold Gains

U.S. stocks pared a solid morning advance as investors weighed some mixed domestic economic data and an afternoon speech from Federal Reserve Chair Janet Yellen. Treasuries, gold and crude oil prices moved lower, while the U.S. dollar gained ground. Equity news included some quarterly results from a few big banks and HP also issued guidance for 2017. Overseas, a broad-based advance in Europe and Asia developed courtesy of eased global growth concerns as a Chinese inflation report countered the disappointing trade data it previously announced.

The Dow Jones Industrial Average (DJIA) added 40 points (0.2%) to 18,138, the S&P 500 Index was nearly unchanged at 2,133 and the Nasdaq Composite ticked 1 point higher to 5,214. In moderate volume, 792 million shares were traded on the NYSE and 1.6 billion shares changed hands on the Nasdaq. WTI crude oil declined $0.09 to $50.35 per barrel, wholesale gasoline ticked $0.01 higher to $1.49 per gallon and the Bloomberg gold spot price lost $5.98 to $1,252.10 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.6% higher at 98.09. Markets were lower for the week, as the DJIA lost 0.4%, the S&P 500 Index decreased 0.7% and the Nasdaq Composite was 0.4% lower.

Dow member JPMorgan Chase & Co. (JPM $68) reported 3Q earnings-per-share (EPS) of $1.58, above the $1.39 FactSet estimate, as revenues rose 8.3% year-over-year (y/y) to $24.7 billion, topping the projected $23.9 billion. Shares relinquished early gains and finished lower.

Citigroup Inc. (C $49) posted 3Q profits of $1.24 per share, above the expected $1.15, as revenues declined 4.0% y/y to $17.8 billion, north of the projected $17.3 billion. C traded modestly higher after paring gains along with the broader financial sector.

Wells Fargo & Co. (WFC $45) announced 3Q EPS of $1.03, topping the estimated $1.01, with revenues rising 2.0% y/y to $22.3 billion, exceeding the forecasted $22.2 billion. WFC gave up early gains and closed lower.

Today's reports begin a heavy dose of banking sector results in the coming days as earnings season ramps up and Schwab's Director of Market and Sector Analysis, Brad Sorensen, CFA, offers in-depth analysis of the financial sector, including rationale for our outperform rating on the group in his latest Schwab Sector Views: Election Special at www.schwab.com/marketinsight.

HP Inc. (HPQ $14) issued fiscal 2017 EPS guidance with a midpoint that was roughly in line with the Street's forecasts, but its free cash flow forecast disappointed some analysts. Additionally, the company said it plans to cut 3,000 to 4,000 jobs over the next three years and increased its planned quarterly dividend by 7.0% to $0.1327 per share, while authorizing an additional $3.0 billion in share repurchases. Shares were under pressure.

Retail sales post solid gains, though consumer sentiment surprisingly sinks

Advance retail sales (chart) for September were up 0.6% month-over-month (m/m), matching the Bloomberg forecast, and compared to August's favorably revised 0.2% decline. Also, last month's sales ex-autos were higher by 0.5% m/m, in line with expectations, and following the negatively revised 0.2% decline seen in the previous month. Sales ex-autos and gas rose 0.3% m/m, in line with estimates, and versus August's upbeat revision to a flat reading. However, the retail sales control group, a figure used to help calculate GDP, was up 0.1%, compared to the projected 0.4% rise, and compared to the prior month's unrevised 0.1% dip. 10 of the 13 categories showed increases, led by solid gains in gasoline station, autos, building materials, and furniture sales, while health and personal care, as well as electronics and appliance sales slumped.

Retail sales rose by the most in three months, but the control group miss may be tempering some of the enthusiasm. Schwab's Chief Investment Strategist, Liz Ann Sonders notes in her article, Your Time is Gonna Come: Households' Leverage Down, Government Leverage Up, households have deleveraged significantly, and a key metric of debt servicing costs are hovering near a record low, which in the past has helped the economy perform admirably. However, Liz Ann adds that the rub for the economy this time is that households have become significantly more frugal as it relates to the balance between spending and saving. Read more at www.schwab.com/marketinsight and follow Liz Ann on Twitter: @lizannsonders.

The Producer Price Index (PPI) (chart) showed prices at the wholesale level in September were up 0.3% m/m, versus expectations of a 0.2% increase, and compared to August's unrevised flat reading. The core rate, which excludes food and energy, rose 0.2% m/m, above forecasts of a 0.1% increase and versus August's unadjusted 0.1% rise. Y/Y, the headline rate was 0.7% higher, versus projections of a 0.6% rise, and the core PPI gained 1.2% last month, matching estimates. In August, producer prices were flat and up 1.0% y/y for the headline and core rates, respectively.

In an afternoon speech at an economic conference sponsored by the Federal Reserve Bank of Boston, Fed Chair Janet Yellen addressed questions about how extreme economic events have often challenged views and the collective knowledge of economists. In one of the Fed Chief's reflections, she expressed how prior to the Great Recession, most economists likely would have agreed that changes in aggregate demand would not "have an appreciable, persistent effect on aggregate supply." However, Yellen further discussed that if this is not always the case, "the next natural question is to ask whether it might be possible to reverse these adverse supply-side effects by temporarily running a "high-pressure economy,"—one with stronger-than-average economic growth and low unemployment—though she concluded with the notion that additional research is necessary to further understand these complex relationships.

The preliminary University of Michigan Consumer Sentiment Index (chart) this month unexpectedly dropped to 87.9—the lowest since September 2015—from the prior month's 91.2 level, and compared to the expected increase to 91.8. The current economic conditions portion of the report improved, though the outlook component fell to weigh on the index. The 1-year inflation outlook remained at 2.4%, while the 5-10 year inflation estimate declined to 2.4% from 2.6%.

Business inventories (chart) rose 0.2% m/m in August, above forecasts of a 0.1% rise, and versus July's unrevised flat reading.

Treasuries finished lower, with the yield on the 2-year note flat at 0.84%, while the yield on the 10-year note increased 6 basis points (bps) to 1.80% and the 30-year bond rate rose 8 bps to 2.58%. Bond yields resumed a recent rally that has been bolstered by some upbeat economic data, hawkish Fedspeak, and the rise in crude oil prices. Schwab's Chief Fixed Income Strategist, Kathy Jones discusses the interest rate environment in her latest article, Are Bond Yields About to Rise?, at www.schwab.com/onbonds and follow Kathy on Twitter: @kathyjones.

Europe and Asia mostly higher on eased banking and China concerns

Stocks in Europe moved higher, with financials leading the way on eased Italian banking concerns and following the plethora of upbeat earnings results out of the U.S. Also, oil & gas and basic materials issues gained ground on the heels of some favorable Chinese inflation reports, which helped calm yesterday's flare-up in growth concerns that stemmed from softer-than-expected China trade data. December rate hike expectations in the U.S. were preserved by today's upbeat retail sales and slightly stronger-than-expected wholesale price inflation reports. In economic news in the region the eurozone trade surplus for August came in well above forecasts. The euro and British pound lost ground on the U.S. dollar, while bond yields in the region moved mostly higher.

With the swings in global growth sentiment and accompanying volatility in the markets, Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, reminds investors, Three Reasons Why Now is Not the Time to Retreat from Global Diversification and why Your portfolio may be less diversified than you think. Read these articles, at www.schwab.com/oninternational, and follow Jeff on Twitter: @jeffreykleintop.

Stocks in Asia finished higher, as global growth concerns that resurfaced yesterday on disappointing Chinese trade data eased somewhat after China followed the trade report with hotter-than-expected September inflation figures, headlined by the first rise in wholesale price inflation since 2012. Securities trading in mainland China and Hong Kong ticked higher and the world's second largest economy is expected to deliver key lending statistics for last month in the coming days. For more on China, see Schwab's Director of International Research Michelle Gibley's, CFA, article, 5 Reasons China Won't Crash the Global Economy in 2016, while Schwab's Jeffrey Kleintop, CFA, offers timely analysis of the global economic picture in his article, World Tour: An Around The World Look At the Economic Landscape. Read both articles at www.schwab.com/oninternational, and follow Schwab on Twitter: @schwabresearch.

An advance for Japanese equities developed with the yen giving back some of the previous session's gains, while South Korean listings also gained ground. Australian stocks finished mostly flat as the China data boosted the Australian dollar, while technology and basic materials issues saw some pressure. Finally, Indian equities managed slight gains.

Stocks dip as conviction gets drained by a plethora of headwinds

U.S. stocks finished lower on the week despite upbeat bank earnings and economic data on Friday. Conviction was stymied by increased Fed rate hike expectations as data continued to perk up, U.S. Presidential uncertainty in the wake of the second debate, dampened earnings sentiment after Alcoa Inc's (AA $26) disappointing report, and resurfaced global growth concerns as China's trade data came in soft. The U.S. dollar continued to rally, along with bond yields, while crude oil prices were little changed in volatile action on festering supply uncertainty. Healthcare stocks led to the downside, while materials, energy and financials issues also saw some pressure.

Earnings season will ramp up next week, while the domestic economic calendar will yields a plethora of data to digest as the markets grapple with Fed rate hike expectations. The docket will be headlined by reads on industrial production and capacity utilization, the Consumer Price Index, housing starts and building permits, existing home sales, the Leading Index, regional manufacturing reports, and the Fed's Beige Book. Also, the Presidential election will remain a source of focus for the markets following Wednesday's final debate. As part of our election 2016 commentary, Schwab's Vice President, Legislative and Regulatory Affairs, Michael T. Townsend offers his latest article, Where Do the Candidates Stand? Key Issues for Investors, at www.schwab.com/insights/category/election-2016, where you can also find timely analysis of The Stock Market and Election Cycles.

As noted in the recent Schwab Market Perspective: Spinning Our Wheels, U.S. equity indexes are within the summer’s range and we believe a bullish rotation within equities may be taking place. The important third quarter earnings season is just gearing up, with expectations having been downgraded over the past couple of months, setting up the likelihood of a good quarter relative to expectations. However, some improvement in economic data and higher inflation readings leaves the possibility of tighter monetary policy from the Fed and even other central banks. Read more at www.schwab.com/marketinsight.

International reports due out next week include: Australia—employment change. China—lending figures, industrial production, retail sales, 3Q GDP, and property prices. India—trade balance. Japan—industrial production. Eurozone—European Central Bank monetary policy decision and the Consumer Price Index. U.K.—the Consumer Price Index and unemployment report.