U.S. Stocks Rise Despite Grim Earnings Guidance; Cryptocurrencies Continue to Struggle

U.S. stocks turned higher on Monday, as investors shrugged off negative earnings guidance from FactSet ahead of President Trump’s planned State of the Union address. Cryptocurrencies were mostly unchanged, though Tron (TRX) and Binance Coin (BNB) put up sizable advances.

Stocks Extend Rally

After a shaky start, all of Wall Street’s major indexes turned positive by the end of the trading day. The Dow Jones Industrial Average rose 175.48 points, or 0.7%, to 25,239.37. Technology giants Apple Inc. (AAPL) and Microsoft Corp (MSFT) led the Dow blue-chips higher.

The broad S&P 500 Index climbed 0.7% to 2,724.87. Nine of 11 primary sectors contributed to the rally, with information technology and communication services leading. The energy sector reversed sizable midday losses to finish slightly higher.

A strong performance in tech boosted the Nasdaq Composite Index, which rallied 1.2% to 7,347.54.

Earnings Will Deteriorate: FactSet

Although Corporate America ended 2018 on a solid note, earnings optimism will likely decline in the first quarter, according to FactSet. In its weekly earnings publication, the financial research firm said S&P 500 companies will report a year-over-year earnings decline in Q1 2019.

During the month of January, the bottom-up EPS estimate for S&P 500 companies declined by 4.1%. That’s a much bigger drop than the five-year, ten-year and 15-year averages. As FactSet notes, the bottom-up EPS estimate is “an aggregation of the median EPS estimates for all the companies” in the S&P 500. This essentially means that earnings will likely deteriorate in Q1 2019 compared with 12 months earlier.

The first-quarter earnings guidance diverges sharply from the previous quarter, where a majority off S&P 500 companies reported better than expected results. As of Friday, the estimated earnings growth rate for 2018 Q4 companies was 12.2%.

Cryptos Lack Direction

The cryptocurrency market failed to rally on Monday despite strong performances from Tron and Binance Coin. The total market capitalization of all coins held right around $114 billion, little changed from weekend levels. This comes despite a sizable increase in trading volumes at the beginning of the week.

Bitcoin has held below $3,500 for over a week, an ominous sign for the bulls. At current levels, BTC could be on track to test new lows in the immediate future. As we’ve seen time and time again during the bear market, an extended period of lateral moves often precedes a fresh wave of selling.

At last check, BTC/USD was trading at $3,465.09, up 0.3% from the previous day.

XRP is currently trading at $0.3031, having gained 0.9% over the past 24 hours. Ethereum edged up 1.2% to $108.27, EOS climbed 1.3% to $2.40 and bitcoin cash traded 0.4% higher at $119.17.

Read: Tron Price Analysis: TRX Outperforms the Market Again as BitTorrent Hype Continues to Build.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi