The Upside on Earnings

As of the end of March, S&P 500 companies were forecast to report earnings growth of 9.1 percent during first quarter earnings season, which kicks off this week. But companies often beat expectations, so the actual earnings growth may be higher.

Over the last five years, 68 percent of companies, on average, have beaten analyst forecasts, adding 2.9 percent on top of expectations, according to FactSet. That would mean the first quarter earnings growth rate could be more like 12 percent, which would be the the best since 2011.

Much of the gain in earnings can be chalked up to the energy sector, which is turning profitable again as oil prices have stabilized. In addition, financials are forecast to have grown earnings by 14.5 percent in the first three months of the year, with bank earnings up 10 percent, according to FactSet.

Retail Unravels Further

Here's a sobering follow-up to Friday's disappointing employment report: More jobs were lost in the beleaguered retail industry than any other sector over the past two months. Some economists are starting to wonder if the number of jobs available at brick-and-mortar stores may have peaked.

The U.S. retail industry shed 29,700 jobs in March and 31,000 in February, according to the Labor Department. The combined two-month decline was the largest since 2009, and comes after the number of workers in the retail industry peaked near 16 million in January.

Some 2,880 store closings have been announced so far in 2017, compared to 1,153 over the same stretch last year, according to Credit Suisse. The current pace of store closures puts the industry on track to top 8,600 this year, far exceeding the peak of 6,163 hit in 2008, at the onset of the financial crisis.

March Jobs Report

The March employment report, out this morning from the Bureau of Labor Statistics, was the most disappointing in a while. The economy added just 98,000 jobs for the month, well down from February’s revised job gains of 219,000.

The good news was that the unemployment rate dropped to 4.5 percent, a new post-recession low and the lowest since May 2007. Wages also rose, increasing by 0.2 percent over last month and a total of 2.7 percent over the prior year.

Today’s report also saw both the January and February jobs numbers revised down by a combined 38,000. Over the past three months, job gains have now averaged 178,000.

The Fed's Inflation Worries

The Fed released the minutes from its last meeting yesterday, and one of the concerns is the return of inflation. Some Fed officials worried that if unemployment, currently at 4.7 percent, fell even further, it could pose a “significant upside risk” of higher inflation.  The Fed's unemployment goal is 4.8 percent, and inflation has remained below the Fed's 2 percent inflation goal for several years.

Some Fed officials argued that the inflation target might be achieved by the end of this year. Others argued that since inflation had run below 2 percent for so long, it would do no harm to allow prices to rise above 2 percent for a time.

“Nearly all members judged that the committee has not yet achieved its objective for headline inflation on a sustained basis,” the minutes said. “A few members expressed the view that the committee should avoid policy actions or communications that might be interpreted as suggesting the committee's 2 percent inflation objective was actually a ceiling.”

Financial Hardships for Women

While there’s been a little improvement in the financial capability of women, they still trail men in being able to make ends meet or covering a financial emergency. That’s according to a report by the TIAA Institute and the Global Financial Literacy Excellence Center, which finds that despite improvement over the study period—2012 through 2015—certain subgroups are still exhibiting financial distress.

In 2015, three-quarters of working women held at least one form of long-term debt, the study found, with many carrying too much debt. Even worse, working women are not prepared for retirement. The majority don’t even plan for it, while two-thirds fear running out of money once they do retire.

In addition, 54 percent of working women do still find it tough to meet all their monthly expenses. Those just beginning their careers, those with lower levels of education and African American women find it particularly difficult.

First Quarter Winners

We looked at the results for the major indexes for the first quarter of 2017 yesterday. Here are the stocks in the S&P 500 that had the strongest first quarters:

• NRG Energy was up 52.8 percent year to date. The utilities sector is up about 5.2 percent for the year.
• Vertex Pharmaceuticals was up 48.4 percent; it released positive results for a cystic fibrosis drug just last week.
• Activision Blizzard was up 38.9 percent; it's the leader in the video game subgroup of the tech sector.
• Viacom Inc., owner of MTV and Paramount Pictures, was up 33.4 percent
• Incyte Corp. was up 33.3 percent; another pharmaceutical, it focuses on cancer drugs.

First Quarter Scorecard

The first quarter ended on Friday, and it was a banner quarter for all the major indexes. The S&P 500 index gained 5.5 percent, its strongest first-quarter performance since 2013 and the best gain it's posted in any quarter since the fourth quarter of 2015.

The Dow Jones industrial average was up 4.6 percent over the past quarter. That marks the sixth consecutive quarterly gain for the Dow, the longest such stretch since the fourth quarter of 2006.

After all that, though, the Nasdaq was the best performer of all the major indexes, returning a nearly 10 percent gain over the past quarter. That's its best quarterly performance since the end of 2013.