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1. Minting money: American companies are pulling in monster profits right now.A combination o...

Posted: May 31, 2018 11:43 AM
Updated: May 31, 2018 11:43 AM

1. Minting money: American companies are pulling in monster profits right now.

A combination of faster economic growth, lower taxes and soaring oil prices are padding the bottom lines of large businesses. Call it the Great American Profit Machine.

Not only are S&P 500 profits sitting at all-time highs, but first-quarter earnings are on track to surge by 24.5% -- the fastest pace since 2010, according to FactSet.

The blockbuster results even managed to blow away Wall Street's lofty expectations. More than three-quarters of S&P 500 companies -- 78% to be exact -- beat earnings estimates. That's the most since FactSet started tracking the stat in 2008.

"Companies are absolutely crushing it on earnings," said Anthony Saglimbene, global market strategist at Ameriprise Financial.

Energy companies are the biggest winners, care of vastly higher oil prices. FactSet said the sector's profits nearly doubled during the first quarter, growing at more than twice the pace of the next closest industry.

If Corporate America's results are so fantastic though, why isn't Wall Street throwing a big party? The S&P 500 is up just 2% this year, after soaring 19% in 2017.

Related: How businesses are really spending their tax cuts

That's because investors have shifted their attention away from the very good fundamentals to focus on a series of worries. Stocks plunged earlier this year due to fears that inflation could jump to levels that force the Federal Reserve to aggressively raise interest rates. A very strong wage growth number in Friday's jobs report renew fears of runaway inflation.

More recently, President Trump's muscular trade agenda has taken the spotlight away from the economy and corporate profits. Worries of a trade war with China have repeatedly dented stocks, though both sides have recently softened the rhetoric. Now Trump is talking about possible tariffs on auto imports.

Last week, stocks were briefly dealt a blow by geopolitics. News that Trump had scrapped the historic North Korea summit weighed on the market and raised concerns about trade talks with China.

Wall Street is also preparing for reality: Profits can't go up like this fast forever. Next year's earnings growth is expected to decelerate to around 10%, according to FactSet.

Against this backdrop, investors are no longer willing to pay ridiculous prices for stocks. The S&P 500 is now trading at about 16.4 times projected earnings. That's higher than the five-year average, but well below the euphoric valuation level of 18.5 hit in January.

So does all of this mean that Wall Street is pricing in the beginning of the end of the good times? Or is this bull market just catching its breath before resuming its run? Stay tuned.

2. May jobs report: Investors will keep a close eye on wages when the Labor Department reveals the May jobs numbers on Friday.

Last month, wages ticked up 4 cents, 2.6% higher than a year earlier. Wages aren't the only things going up - prices have been rising, as well, setting the stage for inflation growth. Higher inflation could trigger faster, steeper rate hikes, which would be bad news for Wall Street.

Investors could respond quickly to wage growth. Earlier this year, when the government reported that wages grew at the fastest pace in eight years in January, markets swung wildly. Wage growth has slowed since then, and inflation fears have calmed.

Wall Street will also be checking to see if economic fundamentals remain strong. In April, the unemployment rate dropped below 4% for the first time since 2000. The economy has added jobs every month for seven and a half years, the longest streak on record.

Related: Unemployment is below 4% for the first time since 2000

3. Facebook faces shareholders: The social media platform is scheduled to hold its 2018 stockholder meeting on Thursday.

The company could face tough questions from investors, especially after CEO Mark Zuckerberg's shsaky performance before European lawmakers. On Tuesday, members of the European Parliament grilled Zuckerberg about the company's handling of fake news, extremist content and whether it should be considered a monopoly. They were not satisfied with his answers, and experts think the EU and Facebook will continue to tussle in coming weeks.

The meeting came two months after news broke that Cambridge Analytica, a data firm connected to President Donald Trump's campaign, had access to information of up to 87 million Facebook users without their knowledge. Zuckerberg testified before Congress about a month ago. Investors were heartened by that performance: Shares went up, and Zuckerberg made $3 billion while he sat for questions.

Related: Mark Zuckerberg ripped by European Parliament for dodging questions

4. Starbucks' big day: On Tuesday afternoon, Starbucks will close around 8,000 of its company-owned locations for racial bias training. About 175,000 employees will participate.

The company announced the plan soon after two black men were arrested in a Philadelphia Starbucks while waiting for a friend. The incident sparked outcry and prompted an apology from CEO Kevin Johnson, who promised to make sure that nothing like that ever happens again.

The training is one step in that effort. A new policy that allows Starbucks customers to spend time in stores and use the bathroom without making a purchase is another. And there are more to come, including additional trainings.

Starbucks has won praise for responding so swiftly and forcefully to the arrest. The coffee chain will share the materials used in the training, and more information, next week.

Related: How Starbucks will train its staff to be less biased

5. Fate of the Volcker Rule: On Wednesday, the Federal Reserve will meet to discuss possible changes to the Volcker Rule, a controversial part of the post-crisis Wall Street reform.

The rule prevents banks like Goldman Sachs or JPMorgan from making risky wagers with their own money, and also from owning big stakes in hedge funds or private-equity firms. Wall Street has been complaining about the rule for years. Now, the Fed may make some changes that could please big banks.

Related: Congress could give bank shareholders a $53 billion gift

6. Coming this week:

Monday -- US markets closed for Memorial Day

Tuesday - Consumer Confidence Index for May

Wednesday - Amazon, Exxon Mobil, Twitter, Walmart annual shareholder meetings; Fed discusses Volcker Rule

Thursday - Facebook annual shareholder meeting

Friday - May jobs report

Mississippi Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 30674

Reported Deaths: 1107
CountyConfirmedDeaths
Hinds248039
DeSoto157216
Madison129634
Jones112049
Neshoba98571
Rankin91612
Lauderdale90879
Harrison88610
Forrest86042
Scott77015
Jackson61616
Copiah60216
Washington5789
Leake57519
Holmes55141
Lee54718
Wayne54213
Oktibbeha54126
Warren51118
Yazoo5056
Leflore48651
Lowndes48312
Grenada4795
Lamar4567
Lincoln45434
Pike43112
Monroe39930
Lafayette3894
Sunflower3737
Attala35923
Covington3475
Panola3456
Newton3399
Bolivar33414
Adams31018
Simpson3103
Pontotoc2836
Tate27810
Chickasaw27618
Marion27511
Claiborne27010
Jasper2616
Noxubee2618
Winston2596
Pearl River25432
Clay24910
Marshall2263
Smith22011
Union2079
Clarke20624
Walthall2004
Coahoma1996
Kemper17814
Lawrence1741
Yalobusha1717
Carroll16411
Humphreys1479
Tallahatchie1364
Itawamba1358
Montgomery1312
Tippah13011
Calhoun1294
Hancock12613
Webster12510
Jefferson Davis1114
Prentiss1083
Jefferson1073
Greene1058
Tunica1003
Wilkinson949
Amite892
George863
Tishomingo781
Quitman760
Choctaw744
Alcorn682
Perry664
Stone641
Franklin452
Sharkey350
Benton340
Issaquena91
Unassigned00

Alabama Coronavirus Cases

Confirmed Cases: 41362

Reported Deaths: 983
CountyConfirmedDeaths
Jefferson4944152
Montgomery4021103
Mobile4005134
Tuscaloosa222642
Marshall170210
Lee135937
Madison13597
Shelby122723
Morgan10715
Walker91424
Elmore90314
Franklin88914
Dallas8799
Baldwin8469
Etowah72713
DeKalb7075
Butler62428
Chambers62427
Tallapoosa58869
Autauga58312
Russell5450
Unassigned50323
Lauderdale4896
Limestone4810
Houston4794
Lowndes46721
Cullman4394
Pike4205
Colbert3916
Coffee3732
Bullock36810
St. Clair3662
Covington3547
Barbour3472
Escambia3376
Calhoun3325
Hale31021
Talladega3037
Marengo30211
Wilcox2908
Sumter28412
Dale2820
Clarke2736
Jackson2682
Winston2543
Chilton2392
Monroe2342
Blount2301
Pickens2276
Marion21913
Conecuh2047
Randolph2009
Choctaw19512
Bibb1871
Macon1859
Greene1838
Perry1701
Henry1323
Crenshaw1253
Lawrence1070
Washington1057
Cherokee857
Geneva790
Lamar751
Fayette681
Clay642
Coosa581
Cleburne361
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