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JOLTS — What you need to know in markets on Tuesday

It’s a bit of a quiet week in economic data, but Tuesday will feature two of the most closely-watched reports of the week.

First thing in the morning we’ll get the latest report on small business optimism from the National Federation for Independent Business. The headline reading on this index spiked last month following Donald Trump’s election.

The increase in optimism among small business owners was boosted by the expected clearing up of “political uncertainty” that clouded much of 2016, so we’ll see if this trend continues in the beginning part of the year.

Also out Tuesday will be the latest job openings and labor turnover survey, or JOLTS report, which is one of Fed chair Janet Yellen’s preferred economic indicators. Economists expect this report — which will reflect conditions in November — to show there were 5.5 million jobs available in the US.

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This report is favored by some economists as it shows some of the dynamism, or stagnation, evident in the labor market.

Earnings season begins

This week, major US banks will report earnings and usher in the beginning of fourth quarter earnings season.

During the season, we’ll get reports on the all-important holiday quarter from companies like Amazon (AMZN) and Apple (AAPL), and we’d expect to get a lot of commentary — or at least hear analysts ask a lot of questions — about how the election is expected to impact business in the early part of 2017.

Overall, analysts expect the market to continue moving out of its earnings recession.

S&P 500 (^GSPC) earnings growth is estimated at 3% over last year for the fourth quarter, according to data from FactSet. FactSet’s John Butters notes that if this growth comes to pass, it will mark the first time since the fourth quarter of 2014 and the first quarter of 2015 that we saw two-straight quarters of year-on-year earnings growth.

And while this 3% increase is smaller than the 5.2% expected at the end of Q3, this is actually a smaller-than-average drop in expectations during the quarter.

Here’s FactSet:

During the past year (4 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 4.7%. During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 4.3%. During the past ten years, (40 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 5.6%. Thus, the decline in the bottom-up EPS estimate recorded during the fourth quarter was smaller than the 1- year, 5- year, and 10-year averages.

Source:FactSet
Source:FactSet

Of note, Alcoa (AA), which has traditionally marked the unofficial beginning of earnings season, will not report until January 24 after splitting from its parent company, now called Arconic (ARNC).

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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