Stocks are entering the busiest week of the year near record highs.
A late-week rally led by gains in Tesla ( TSLA ) shares helped the Nasdaq Composite close nearly 0.9% higher for the week, just shy of a new record high. Meanwhile the S&P 500 ( GSPC ) fell more than 0.3% and the Dow Jones Industrial Average ( DJI ) fell more than 2.6%.
Next week, the Federal Reserve's preferred inflation gauge, the October jobs report and an update on earnings from big tech stalwarts Alphabet (GOOGL,GOOG), Apple (AAPL), Amazon (AMZN), Microsoft (MSFT) and Meta. (META) will guide the market starting November.
Updates on third-quarter economic growth, job creation, service and manufacturing sector activity and consumer confidence are also on the calendar.
A busy week of corporate earnings awaits, with 169 members of the S&P 500 expected to report quarterly results. Ford ( FORD ), AMD ( AMD ), McDonald's ( MCD ), Eli Lilly ( LLY ), and Exxon ( XOM ) will be among the companies highlighted on the schedule.
Several economic data will test investors' bets next week. On Wednesday, the Bureau of Economic Analysis is set to release advance estimates for third-quarter gross domestic product (GDP). Expectations are that the US economy continues on its strong path and grew at a 3% annual rate in the quarter, in line with the growth seen in the second quarter.
Thursday will bring the latest reading of the Fed's preferred inflation measure. Economists expect annual “core” PCE — which excludes the volatile food and energy sectors — to clock in at 2.6% in September, down from the 2.7% seen in August. In the previous month, economists projected “core” PCE at 0.3%, compared to 0.1% the previous month.
On Friday, the Bureau of Labor Statistics will provide a new look at the national employment situation. According to Bloomberg data, the October jobs report will show that the US economy added 125,000 non-farm payroll jobs, with unemployment holding steady at 4.1%. In September, the US economy added 254,000 jobs, while the unemployment rate fell to 4.1%.
“After two hurricanes, a strike and rolling furloughs, we expect a lot of noise in next Friday's October employment report,” RBC Capital Markets' Michael Reid wrote in a note to clients on Thursday.
Given the range of factors that could weigh on job growth, Reed wrote that the unemployment rate “will provide the best reading on the labor market this month.”
Entering a busy week of economic data, markets are pricing in a 96% chance the Federal Reserve will cut interest rates at its November meeting, according to the CME FedWatch tool.
With 37% of the S&P 500 reporting quarterly results, the index is on pace for 3.7% year-over-year earnings growth. That would be the slowest annual growth rate since the second quarter of 2023, according to FactSet.
Big tech earnings will test that narrative next week. FactSet recently noted that the “Magnificent Seven” technology stocks were set to grow earnings by 18.1% year over year this quarter, while the other 493 companies in the S&P 500 are expected to grow just 0.1%.
Apple, Alphabet, Amazon, Meta and Microsoft are all expected to report quarterly earnings next week, after a late-week tech rally brought several big tech names back near record highs. Reports will once again bring artificial intelligence back into full focus. Investors will be listening for clues about how much these companies are spending on emerging technologies and whether they're making a profit.
Given the recent rise in big tech stocks, Nancy Tengler, CEO and chief investment officer of Laugher Tengler Investments, cautioned Yahoo Finance about a possible muted reaction to the earnings release.
“There is a risk that you will see a name like Microsoft Beat [estimates]Which they historically do at about 76% of earnings, and you get nothing from the stock price,” Tengler said.
Economic data surprised Wall Street last month. The City Economic Surprise Index, which measures whether economic data is coming in better or worse than expected, reached its highest level since April.
That matched a rise in the 10-year Treasury yield (^TNX), which added nearly 50 basis points last month to near 4.2%. In some cases, higher yields can be a headwind for stocks. But as Kelly Cox, chief market strategist at Ritholtz Wealth Management pointed out, equity strategists argue that if yields rise alongside solid economic growth, that could still be a welcome sign for stocks.
“A gradual upward shift [in yields] … For the right reasons, with high growth expectations, those earners have historically tended to be good,” Gargi Chaudhary, chief investment and portfolio strategist at BlackRock America, told Yahoo Finance. “So maintaining quality in your portfolio is really important.”
Weekly calendar
monday
Financial Information: Dallas Fed manufacturing activity, October (-9 expected, -9 prior)
Earnings: Ford (F), Phillips (PHG), Waste Management (WM)
tuesday
Financial Information: S&P CoreLogic 20-city year-over-year NSA, August (5.92% prior); Conference Board Consumer Confidence, October (99.0 expected, 98.7 prior) JOLTS Job Openings, September (7.9 million expected, 8.04 million prior); Dallas Fed service activity, October (-2.6 before)
Earnings: Alphabet (GOOGL,GOOG), AMD (AMD), BP Oil (BP), Chipotle (CMG), Crocs (CROX), McDonald's (MCD), JetBlue (JBLU), Paypal (PYPL), Pfizer (PFE), Reddit ( RDDT), Royal Caribbean Group (RCL), Snap (SNAP), Sofi (SOFI), Visa (V)
on wednesday
Financial Information: MBA mortgage applications, week ending Oct. 25 (-6.7% earlier); ADP Personal Payrolls, October (+100,000 expected, +143,000 prior); GDP annualized quarter-over-quarter, third quarter advance estimate (3% expected, 3% prior); Core PCE price index quarter-over-quarter, third quarter advance (+2.8% earlier); Pending home sales month over month, September (0.6% prior)
Earnings: ADP (ADP), Caterpillar (CAT), Carvana (CVNA), Coinbase (COIN), Etsy (ETSY), Eli Lilly (LLY), Microsoft (MSFT), Meta (META), Roku (ROKU), Robinhood (HOOD) , Starbucks (SBUX)
Thursday
Financial Information: Core PCE index month-on-month, September (+0.2% expected, +0.1% earlier); Core PCE index year-on-year, September (+2.6% expected, 2.7% earlier); Initial jobless claims, week ended Oct. 26 (227,000 earlier); Continuous claims, week ending Oct. 19 (1.897 million earlier); Employment Cost Index, third quarter (0.9% expected, 0.9% earlier); Challenger job cuts, year-over-year, October (+52.4% prior); Personal Income, September (+0.4% expected, +0.2% prior); Personal Spending, September (+0.4% expected, +0.2% prior); MNI Chicago PMI, October (previously 46.6)
Earnings: Apple (AAPL), Amazon (AMZN), Conoco Phillips (COP), Estee Lauder (EL), Kellanova (K), Intel (INTC), Mastercard (MA), Norwegian Cruise Lines (NCL), Peloton (PTON), Merck (MRK), SiriusXM (SIRI)
Friday
Economic Calendar: Nonfarm payrolls, October (+125,000 expected, +254,000 earlier); Unemployment rate, October (4.1% expected, 4.1% earlier); Average hourly earnings, month-over-month, October (+0.3% expected, +0.4% prior); Average hourly earnings, year-over-year, October (+4% expected, +4% prior); Average weekly hours worked, October (34.2 expected, 34.2 earlier); Labor force participation rate, (previously 62.7%); S&P Global US Manufacturing PMI, October final (47.8 prior); ISM manufacturing, October (47.6 expected, 47.2 prior); ISM Price Paid, October (48.3 ago)
Earnings: Charter Communications (CHTR), Dominion Energy (D), fuboTV (FUBO), Chevron (CVX), Exxon Mobil (XOM), Wayfair (W)
Josh Schafer is a reporter for Yahoo Finance. Follow him in X @_joshschafer.
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