Market Mood Swings: Wall Street Eyes Earnings amid Economic Signals
The Dow Jones Industrial Average (DJI), S&P 500 Index (SPX), and Nasdaq Composite (IXIC) have experienced significant fluctuations recently, yet all three indexes are striving for a fifth consecutive weekly gain. The week kicked off with rising oil prices and Treasury yields, pushing the Cboe Volatility Index (VIX) above the notable 20 threshold. However, by midweek, market conditions stabilized as investors awaited the Federal Reserve’s meeting minutes, crucial inflation data, and numerous earnings announcements.
According to the CME’s FedWatch tool, there’s an 87% likelihood of a 25 basis-point increase in November. Yet, differing opinions highlighted in the central bank’s meeting minutes created uncertainty. This came after September’s consumer price index (CPI) exceeded expectations, while the subsequent producer price index (PPI) met estimates but failed to lift market spirits. Investors are now focusing on the forthcoming earnings season to gauge the U.S. economy’s overall health.
Banking Sector Leads Earnings Reports
The banking industry has begun to unveil its fourth-quarter earnings. Wells Fargo (WFC) and JPMorgan Chase (JPM) both surpassed analysts’ predictions in their third-quarter results, bolstered by higher-than-expected interest income for JPMorgan. In contrast, Delta Air Lines (DAL) reported lackluster quarterly results, missing both revenue and earnings forecasts, and provided a pessimistic fourth-quarter revenue outlook. PepsiCo (PEP) also shared its financials for the third quarter.
Apart from earnings, Tesla (TSLA) experienced a decline as its much-anticipated product launch fell short of analysts’ expectations. Meanwhile, DocuSign (DOCU) soared to a 52-week high after replacing MDU Resources (MDU) in the S&P MidCap 400. Additionally, Rio Tinto (RIO) announced a significant move into the lithium sector with a $6.7 billion acquisition of U.S.-based Arcadium Lithium (ALTM).
Mixed Signals from Analysts
This week brought both positive and negative news from analysts. Notably, Apple (AAPL) and Amazon.com (AMZN), two giants of the tech world, were downgraded—Apple to “hold” and Amazon to “equal weight.” Homebuilder KB Home (KBH) was also hit with a bear note from Wells Fargo, suggesting it might lag behind its competitors. On a brighter note, TD Cowen increased its price target for Chewy (CHWY) by nearly 30% compared to Tuesday’s closing price. Reddit (RDDT) saw new positive analyst coverage along with a target price that topped Wall Street’s expectations. Lastly, Wells Fargo received a pre-earnings upgrade from Wolfe Research.
Upcoming Reports to Watch
The earnings season is set to accelerate next week with reports from numerous banks and companies such as Johnson & Johnson (JNJ), Netflix (NFLX), PNC (PNC), Procter & Gamble (PG), and Walgreens Boots Alliance (WBA). More employment and housing data will also be released shortly, offering deeper insights into the market.
Be sure to check out Schaeffer’s Senior Quantitative Analyst Rocky White’s analysis on the advantages of holding both stocks and commodities, alongside Senior V.P. of Research Todd Salamone’s insights into a critical SPX pivot point.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
