Stocks trade at record highs for another week as investors begin to digest quarterly earnings releases and debate intensifies over what the Federal Reserve will do at its November meeting. Finished.
The Nasdaq (^IXIC), S&P 500 (^GSPC), and Dow Jones Industrial Average (^DJI) are all up more than 1% this week, with both the Dow and S&P 500 closing at all-time highs on Friday. .
The monthly report on retail sales will dominate the economic calendar over the coming week as investors assess whether the economy is reaccelerating after a surprisingly strong September jobs report.
In corporate news, results from Bank of America (BAC), Goldman Sachs (GS), and Morgan Stanley (MS) round out the big banks’ earnings, while United Airlines (UAL) and Netflix (NFLX) The report will also attract attention. That week.
Uncut November architectural examples
Over the past week, there has been growing speculation that the U.S. Federal Reserve will not cut interest rates further at its November meeting. The September employment report showed that the unemployment rate fell again and monthly salary additions hit the highest numbers this year, allaying fears that the labor market was deteriorating rapidly.
The latest Consumer Price Index (CPI) report on Thursday showed core prices rose more than expected. The latest Producer Price Index (PPI) showed the same on Friday, with core prices rising 2.8% versus Wall Street’s 2.6% expectations.
Given this data and recent minutes from the Fed’s September meeting, which revealed that “some” officials would have supported a modest rate cut, the central bank could keep rates unchanged in November. Some people claim it’s expensive.
“Unless inflation heads toward 2% that dramatically, and unless there’s a crisis in the labor market (which I don’t foresee), there is no reason for the Fed to cut rates further this year. I think so,” Eric Wallerstein, chief market strategist at Yardeni Research, told Yahoo Finance.
As of Friday, markets were pricing in a roughly 18% chance the Fed wouldn’t cut rates in November, up from a 3% chance a week ago, according to the CME FedWatch tool.
US Federal Reserve Chairman Jerome Powell attends a press conference in Washington, DC, September 18, 2024 (Hu Yousong/Xinhua News Agency, via Getty Images) (Xinhua News Agency, via Getty Images)
retail reading
Better-than-expected economic data helped fuel the “no-cut” debate. Investors will get another update on the sector this week when the September retail sales report is released on Thursday.
Economists expect retail sales to rise 0.2% in September from the previous month. Retail sales rose 0.1% in August, contrary to economists’ expectations for a decline.
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“Retail sales in particular have the potential to move the market significantly as series volatility increases and consumer health scrutiny increases,” Jefferies’ economics team, led by Thomas Simmons, said in a note to clients on Friday. There is,” he said. “I would caution against reading too much into the outliers to the consensus (upside or downside) because retail sales measures spending with a much higher weight on goods than services, and it is measured in nominal terms. The weakness may simply be due to continued disinflation or deflation. ”
Netflix hits the big screen
Big banks have largely passed Wall Street’s test for the start of earnings season. Investors’ attention will continue to focus on financials early in the week with reports from Morgan Stanley, Goldman Sachs and Bank of America, before turning to Netflix’s results after the bell on Thursday.
The streaming giant’s stock has risen about 50% this year and is trading near all-time highs. Wall Street expects Netflix to report earnings of $5.16 per share on revenue of $9.77 billion. This represents a nearly 40% increase in profits year-over-year.
But Wall Street is fiercely debating whether stocks can sustain their big gains. Citi analyst Jason Bazinet thinks Netflix’s announcement of further price increases in the U.S. could be a driver for the stock in the near term.
“We expect Netflix’s stock price to rise following the U.S. price hike announcement, but as investors’ expectations for earnings per share of $25 in 2025 are dashed, the stock price will ultimately decline. We expect it to decline.”
Yields are rising
The 10-year Treasury note (^TNX) is hovering around 4.1% for the first time since late July.
The 10-year Treasury note has tumbled around 30 basis points over the past week as investors dialed back expectations for rate cuts amid strong economic growth data but signs that inflation may be stronger than initially expected. bp) rose.
Rising yields have been a headwind for stocks for most of the past few years. But Piper Sandler chief investment strategist Michael Kantrowitz told Yahoo Finance on Thursday that yields likely haven’t risen enough to create much of a headwind yet.
“I don’t think this rise in interest rates is really a concern for stocks overall,” Kantrowitz said. “But it’s the leadership that shows up.”
Kantrowitz said sectors such as real estate (XLRE) and the small-cap Russell 2000 Index (^RUT) have benefited from investors expecting lower interest rates, but amid the recent rise in 10-year Treasury yields. He pointed out that he was lagging behind.
Kantrowitz added that rising interest rates are determining market leadership more than weighing on the S&P 500 right now.
“Even if interest rates continue to rise, I don’t think it’s going to be a big problem for stocks, unless it lasts maybe a few months,” he said.
Monday
Economic data: New York Fed 1-year inflation expectations, September (3% YoY)
Revenues: There are no significant revenues.
Tuesday:
Economic data: Empire Manufacturing, October (estimated 0.5, pre-valued 11.5)
Earnings: Bank of America (BAC), Charles Schwab (SCHW), Citi (C), Goldman Sachs (GS), JB Hunt (JBHT), Johnson & Johnson (JNJ), Progressive (PGR) , State Street (STT), United Airlines (UAL), UnitedHealth Group (UNH), Walgreens Boots Alliance (WBA)
Wednesday
Economic data: MBA home loan applications, week ending October 11 (previously down 5.1%). September import price index month-on-month change (forecast -0.3%, previous -0.3%). September export price index month-on-month change (forecast -0.3%, previous -0.7%)
Revenue: Abbott (ABT), Alcoa (AA), ASML (ASML), Citizen (CIA), Discover Financial Services (DFS), Morgan Stanley (MS).
Thursday
Economic data: New jobless claims for the week ending October 12 (previously 258,000). September retail sales month-over-month (forecast 0.2%, previous 0.1%). Retail sales excluding automobiles and gasoline, September (forecast 0.3%, previous 0.2%). Philadelphia Fed Business Outlook, October (2.9 expected, 1.7 previously). Industrial production, month-on-month, September (forecast 0%, previous 0.8%). NAHB Housing Market Index, October (42 forecast, 41 advance). Leading index, March (forecast -0.1%, previous +0.1%). Existing home sales in March compared to the previous month (forecast -5.1%, previous 9.5%)
Revenue: Netflix (NFLX), Blackstone (BX), Travelers (TRV), First National Bank (FBAK), Western Alliance (WAL), WD-40 (WDFC)
Friday
Economic data: September housing starts m/m (-0.9% expected, 9.6% previously). Month-on-month increase in number of building permits in September (predicted 0.3% decrease, previous 4.9% decrease)
Revenue: Ally Financial (ALLY), American Express (AXP), Comerica (CMA), Procter & Gamble (PG)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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