Investors around the world breathed a sigh of relief on Monday as the first round of French elections points to France staying in the European Union. Some investors feared that two extremist candidates would make it to the final vote on Sunday, May 7, but the centrist candidate will be in the election. These results have lifted stock prices across the globe.
In the U.S., Wall Street will shift its attention to a possible government shutdown this Friday, April 28. However, the government could easily extend the deadline for a couple of weeks. This funding they are voting on only goes through October 1. Points of concern are paying for the Affordable Care Act, the border wall, and defense. At Simply Money Advisors, we believe the government will not shutdown. Meanwhile, another risk is related to North Korea, which warned of a "super-mighty preemptive strike" on U.S. forces. Any action from North Korea - should it occur - would most likely be in the form of an attack on South Korea.
This week's top data include new home sales, durable goods (items that are meant to last for a while, such as a washing machine), and the first estimate of the U.S.’s Gross Domestic Product (GDP) for the first three months of 2017. GDP is basically our country’s report card. Economists are forecasting the U.S. grew 1.1%. The reason for this relatively slow pace is that spending by you, the consumer, has flattened out. Simply Money Advisors expects this to improve over the remainder of the year, however, as wages rise.
Also this week, there will be 186 companies from the S&P 500 (the 500 largest companies in the U.S.) reporting earnings, including Fifth Third Bank and Procter & Gamble. So far, earnings have grown 13% over the past year on average, with 82% of the companies reporting earnings better than analysts expected.
The Simply Money Point
Over the weekend, President Trump said that his administration will be announcing massive tax reform for businesses and individuals this week, most likely on Wednesday. While you’ll probably see stocks react positively to this news, don’t expect actual changes this year – while we believe tax reform will eventually pass through Congress, any positive economic impact won't happen until 2018.