Are Investors Waiting for Earnings Season?

The markets are starting the week off wading in a sea of red in what could be seen as housecleaning in the first week of a new quarter. Comments from members of the Federal Reserve are still making headlines, but could investors be finally turning their attention to fundamentals ahead of the kick off to earning’s season next week?

Yesterday we faced a wall of worry as the VIX, what Wall Street calls its “fear gauge,” jumped almost 8%. Bond yields were down as investors searched for fixed-income products. Gold fell too, but that safe haven seems to be getting traction today.

This isn’t just a U.S. markets retrenchment either. Most European and Asian markets retreated in a global selloff that some analysts say could be tied to falling oil prices and worries abroad about negative interest rates. Oil has had a nice run in the last few weeks but is now facing its third straight day on a downward trajectory, falling below $36 a barrel.

Speaking of interest rates, Federal Reserve members who aren’t Chair Janet Yellen are out making speeches this week about their thoughts on when interest rates will rise. Chicago Fed President Charles Evans said in a speech Monday in Hong Kong that the U.S. central bank has to be proactive and aggressive to meet the Fed’s inflation targets. We’re reminded, however, that Yellen is the boss and her dovish comments rule the roost. On Wednesday, the Fed will release minutes from its last meeting and we’ll get to see how contested—or not— that meeting was.

This is the third straight day of oil prices declines amid worries around the world that major crude producers won’t come to a freeze agreement when they meet later this month. That started Friday, when Saudi Arabia said it wouldn’t be on board unless Iran was.

Reports on the docket today that could influence trading include the ISM nonmanufacturing survey, which will give some insight into what’s working or not in the services sector, and the February JOLTS, the job openings and labor turnover survey. The Fed has said that it’s watching JOLTS numbers, but remember it’s just another data point for the central bank.

Though Monday’s trading ended with a thud—the Dow, Nasdaq and S&P 500 all finished to the downside—there were spots of brightness. Take the S&P: It ended its upward streak but still had a number of components that touched all-time highs. They were mostly consumer-based stocks like McDonald’s Corporation MCD, The Coca-Cola Company KO, PepsiCo, Inc. PEP and The Home Depot, Inc. HD, as well as a handful of utilities stocks. Elsewhere, losses in commodity-related and industrial stocks overwhelmed advances in healthcare shares.

Why Aren’t Consumers Spending? The Money Anxiety Index, a measure of consumers’ level of financial stress, was flat in April at 64, according to its creator Dan Geller. That indicates “uncertainty and financial anxiety among consumers about the economy,” says Geller, a behavioral finance expert and author. “Although the economy is improving, consumers are not completely on board with the personal consumption, thus putting the brakes on the economic growth,” he says. Consumer spending is pivotal to economic growth because it accounts for some two-thirds of GDP. The index, which is a monthly measurement of the consumer anxiety levels over more than 50 years, was trending downward since May when it was at 69.9. It was at its lowest angst level over the last 12 months in February, at 62.7.

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