The interminable wait for details of tax reform continues in the coming week. Don't expect any big swings upwards for markets until that comes to pass.
Any progress on that front has been spiked as President Donald Trump and his team fight fires elsewhere. More questions over Russia's involvement in the presidential election, possible collusion between the Trump campaign and Russian operatives, and the sudden firing of FBI Director James Comey, the man heading the Russia investigation, have kept the Trump team busy in recent days.
"I'd really like to see government get back to the business of government and get us some results on taxes and on health care," Rob Bartenstein, CEO of Kestra PWS, said in a phone call. "I don't think that the market as a whole has a tremendous amount of upside from here in the absence of those changes. The market is kind of marking time now."
The White House revealed its highly anticipated tax plan in late April, but the lack of detail left markets to spin their wheels until substantive plans are outlined. The plan, which included a one-page release and brief press conference, included proposals such as a reduction in the corporate tax rate to 15% from 35% and limiting the number of individual tax brackets to three from seven.
Despite the chaos surrounding the Russia investigation and the wait for substantive policy, the markets have persisted. Stocks have held onto the gains achieved during the Trump rally and even inched further into record territory. A market rally after the November election pushed the S&P 500 and Nasdaq to never-before-seen levels and catapulted the Dow Jones Industrial Average to clear its 20,000 hurdle.
Until the markets get more clues as to what the tax reform will look like and when it could come to pass, the market rally might be stuck in neutral for even longer.
"Even a hint of progress ... definitely stirs the animal spirits and gets people motivated," added Bartenstein.
Until then, we could see more of this low-volatility environment as the earnings season comes to a close and investors wait for the outcome of the Federal Reserve's meeting next month. Volatility recently fell to its lowest level in 24 years as markets played the waiting game.
Wall Street begins the week with more than 90% of S&P 500 companies already having reported earnings. So far this season, 75% of S&P 500 companies have exceeded earnings estimates, while 63% have beat revenue expectations.
Retailers are again in the spotlight in the coming week. Home Depot (HD) - Get Report , TJX Companies (TJX) - Get Report , and Urban Outfitters (URBN) - Get Report will report on Tuesday; AmericanEagle Outfitters (AEO) - Get Report , L Brands (LB) - Get Report , and Target (TGT) - Get Report on Wednesday; Bon-Ton Stores (BONT) , Buckle (BKE) - Get Report , Gap (GPS) - Get Report , New York & Co. (NWY) , Ralph Lauren (RL) - Get Report , Ross Stores (ROST) - Get Report , and Wal-Mart (WMT) - Get Report on Thursday; and Foot Locker (FL) - Get Report on Friday.
So far, 66% of companies in Thomson Reuters' Retail/Restaurant Index have reported on their recent quarter. Of those, 68% have exceeded earnings consensus, while 60% have topped sales estimates. Nearly 30% of retailers have exceeded same-store sales, while 69% have missed.
Elsewhere on the earnings calendar, Sina (SINA) - Get Report , Vodafone (VOD) - Get Report , and Weibo (WB) - Get Report will report on Tuesday; Cisco (CSCO) - Get Report on Wednesday; Alibaba (BABA) - Get Report , Autodesk (ADSK) - Get Report , and Salesforce.com (CRM) - Get Report on Thursday; and Deere & Co. (DE) - Get Report , and Campbell Soup (CPB) - Get Report on Friday.
On the economic calendar in the coming week, the Empire State Manufacturing Survey and the housing market index for May will be released on Monday; housing starts and industrial production for April on Tuesday; and the Philadelphia Fed Business Outlook Survey for May on Thursday.