Stocks saw a modest sell-off last week, with the S&P 500 down 0.44% to 2,372, the first down week since mid-January. Small-caps fared worse as the Russell 2000 was off 2.07% to 1,365. Crude Oil suffered a 9.08% drop to $48.49/barrel.
As of March 10, earnings season is nearly complete, with 99% of the companies in the S&P 500 reporting actual results for Q4 2016. Of these companies, 65% beat mean EPS estimates and 53% beat sales estimates, according to Fact Set Research. With earnings growth at 4.9%, the fourth quarter will be the first time the S&P 500 index has seen y/y growth in earnings for two consecutive quarters since Q4 2014 and Q1 2015.
The employment situation was the big US economic data release last week. Nonfarm payrolls grew 235,000 vs. expectations of 200,000, locking in next week's FOMC rate hike. The market is pricing in a 100% chance of the hike occurring. January saw an upward revision of +11,000 to 238,000. Dropping 0.1%, the unemployment rate was 4.7%.
In company specific news, Alphabet (GOOGL) and Starbucks (SBUX) held presentations. For GOOGL, it was the Google Next event, where management discussed new developments and partnerships in Google's Cloud division. The company announced partnerships with Verizon, eBay, and Colgate-Palmolive to run services on the cloud. At SBUX's conference presentation, management acknowledged the issues that the company is currently facing, including the slowdown in the restaurant-away-from-home category, difficult y/y growth comparisons, and mobile ordering difficulties. The company is disappointed in its performance and urgently attempting to fix the problems.
Next week, the Fed's interest rate decision will be the focus. In addition, investors will look at releases of CPI and Retail Sales data.