Yesterday, U.S. equities finished solidly higher, with a jump in crude oil prices giving the energy sector a boost on rising hopes of a potential production freeze agreement at the conclusion of this weekend's meeting among world oil leaders. Industrials powered the major indexes higher, shrugging off Alcoa's mixed results that unofficially kicked off 1Q earnings season after yesterday's close, while the recently beaten-down financial sector saw nice gains as well. Treasuries were lower, as was gold, while the U.S. dollar was nearly unchanged.

The Dow Jones Industrial Average (DIA) rose 165 points (0.9%) to 17,721, the S&P 500 Index (SPY) increased 20 points (1.0%) to 2,062, and the Nasdaq Composite (QQQ) climbed 39 points (0.8%) to 4,872. In moderately-heavy volume, 953 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq. WTI crude oil rallied $1.81 to $42.17 per barrel, wholesale gasoline was $0.02 higher at $1.53 per gallon and the Bloomberg gold spot price ticked $0.40 lower to $1,257.48 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was flat at 93.96. 

Alcoa Inc. (AA $9) reported 1Q earnings-per-share (EPS) ex-items of $0.07, above the $0.02 FactSet estimate, as revenues dropped 15.0% year-over-year (y/y) to $4.9 billion, compared to the projected $5.0 billion. The largest aluminum producer, per Bloomberg, lowered its full-year outlook for its engineered products and services segment—to be called Arconic—which supplies aircraft manufacturers and is its largest manufacturing unit. AA was lower. 

Juniper Networks Inc. (JNPR $23) reduced its 1Q EPS and revenue guidance, due primarily to weaker-than-anticipated demand from corporate customers and telecommunications providers. The networking equipment company said although it expects results to be lower than its initial guidance for 1Q, it remains constructive on fiscal 2016. Shares were sharply lower. 

Marathon Oil Corp. (MRO $13) rallied after announcing agreements for the sale of certain non-core assets for $950 million, bringing the total to approximately $1.3 billion since last year. 

Fastenal Co. (FAST $45) saw pressure after the industrial supply company posted 1Q gross margin that missed expectations, along with its March flat y/y sales. The results accompanied its 1Q EPS figure and quarterly sales growth of 3.5% y/y, that were roughly in line with forecasts. 

Small business optimism surprisingly slips

The National Federation of Independent Business (NFIB)Small Business Optimism Index for March declined to 92.6 from February's 92.9 level, and versus the Bloomberg forecast calling for a slight increase to 93.5. 

The Import Price Index (chart) rose 0.2% month-over-month (m/m) for March, compared to projections of a 1.0% increase, and February's 0.3% decline was revised to a 0.4% decrease. Y/Y, prices were down by 6.2%, versus the 4.8% forecasted drop, and following February's downwardly revised 6.5% fall. 

Treasuries finished lower, as the yields on the 2-year and the 10-year notes rose 6 basis points (bps) to 0.73 and 1.78%, respectively, while the 30-year bond rate increased 5 bps to 2.60%. 

Fed monetary policy remains in focus, amid a flood of commentary from members of the Fed that continue to show policymakers are divided on the timing of the next rate hike. Also, Chairwoman Yellen highlighted the "healing" labor market, but also noted that the Fed carefully considers the impact of its actions on the rest of the world in a speech last week with three of her predecessors as discussed by Schwab's Chief Investment Strategist Liz Ann Sonders in her article, Recession: Your Time is Gonna Come … But Not Yet. Liz Ann notes that the recession topic was addressed head on at the meeting, adding that although we’re unlikely to exit from a muddle-through state, the risk of recession is objectively low. Moreover, Schwab's Chief Fixed Income Strategist, Kathy Jones, offers her analysis on the Fed in her article, Will Rising U.S. Debt Levels Keep the Fed on Hold?. 

Tomorrow's economic calendar will heat up, headlined by the release of March retail sales, expected to tick 0.1% higher m/m, after dipping 0.1% in February. Excluding autos, sales are projected to rise 0.4%, after the prior month's 0.1% dip, while stripping out autos and gas, sales are anticipated to grow 0.3%, matching February's gain. Also, the Fed will deliver its Beige Book report, a tool summarizing economic activity across the nation used by the Federal Open Market Committee (FOMC) to prepare for its next monetary policy meeting scheduled to end April 27. 

Schwab's Director of Market and Sector Analysis, Brad Sorensen, CFA, notes in his latest Schwab Sector Views: What's Wrong with Health Care?, data on retail sales and consumer confidence suggest a still-cautious shopper, but we think these reports underestimate what is actually occurring, as some services and experience-type items aren’t included in those numbers. The trend may also be shifting as consumers appear to have slowed paying down their debt balances, potentially a positive development for spending, but still seem reluctant to increase their borrowing. Our marketperform rating remains in place for the consumer discretionary sector, as the American consumer continues to present a mixed picture. 

Other domestic reports slated for tomorrow include: the Producer Price Index, business inventories and MBA mortgage applications. 

Europe mostly higher as commodity issues rally, Asia mixed 

European equities showed some late-day resiliency to finish higher, courtesy of strength in commodity issues, which overshadowed a downgraded economic growth outlook from the International Monetary Fund and disappointing results as earnings seasons begin on both sides of the pond. Oil prices gained ground to lift the energy sector ahead of this weekend's meeting between major oil producers, with optimism lingering about the possibility for an output freeze, bolstered by reports of a possible deal reached between Russia and Saudi Arabia. In economic news, U.K. consumer price inflation came in hotter than expected for March, while German consumer price inflation rose in line with expectations. The euro was lower versus the U.S. dollar, while bond yields in the region moved higher. 

Stocks in Asia finished mixed with mainland Chinese markets being hamstrung ahead of this week's flood of data, while Japanese stocks got some relief as the yen retreated from its recent rally, boosting export-related stocks, while the Bank of Japan's move to tweak the portion of bank funds that are subject to negative interest rates bolstered the financial sector. Mainland Chinese stocks declined, with economic sentiment getting hampered by the country's Premier Li's warning of continued downward pressures on the second-largest global economy. The comments come ahead of a flood of data out of China slated for this week, headlined by the release of its 1Q GDP report, projected to show growth slowed slightly to 6.7% y/y, from 6.8% in 4Q. However, shares traded in Hong Kong moved higher, extending its recent winning streak to five sessions, buoyed by yesterday's rise in oil prices that boosted the energy sector. 

Stocks in India advanced ahead of this week's start of earnings season and data after the closing bell on inflation and industrial production. The nation's consumer price inflation slowed more than expected for March, and the report was complemented by a favorable estimate of above normal rainfall to ease inflation concerns and possibly provide more room for further monetary policy easing, per Bloomberg. Additionally, India's industrial production rose more than expected for February. Finally, Australian securities rose, led by financials and basic materials stocks, aided by a report showing business confidence in the nation improved noticeably for March. 

Additional inflation data from abroad will grace the international economic calendar, with reports coming from Japan, France and Spain, as well as India's trade balance, and consumer confidence from Australia. 

Schwab Center for Financial Research ("SCFR") is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.