Table of Contents
Stocks posted their sixth straight week of gains on Friday as strong earnings from Netflix (NFLX) boosted the overall technology sector. Attention now turns to other Magnificent Seven names, with EV maker Tesla (TSLA) set to report quarterly results on Wednesday.
The Dow Jones Industrial Average (^DJI) led markets higher, up about 1% last week. The benchmark S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) followed, each posting weekly gains of about 0.9% and 0.8%, respectively.
Both the Dow Jones and S&P 500 also reached record highs during the week.
Meanwhile, the rotation out of mega-cap tech into other parts of the market was evident this week as utilities (XLU) moved higher, ending the five-day period up 3.4%, followed by real estate (XLRE) and financials (XLF) . with gains of 3% and 2.4% respectively. Small caps also outpaced the major indexes, with the Russell 2000 (^RUT) ending the week up about 2%.
The market moves come as investors have enjoyed a particularly strong start to earnings season, with major tech giants like Apple (AAPL) and Amazon (AMZN) yet to report.
So far, 79% of S&P 500 companies have delivered a positive third-quarter earnings surprise, above the overall five-year average of 77%, according to FactSet senior earnings analyst John Butters.
The earnings season celebration continues this week, with reports from Tesla, Boeing (BA), General Motors (GM), American Airlines (AAL) and UPS (UPS) highlighting a busy schedule.
Beyond the earnings numbers, investors will also be keeping an eye on a slew of economic data, including the University of Michigan’s final consumer sentiment reading, due out Friday. The Fed Beige bookscheduled for Wednesday, will provide another boost to current economic conditions across the Federal Reserve’s twelve districts.
After mortgage rates, the housing market will also be a priority rose for the third week in a row, with the 30-year fixed rate moving closer to 6.5%.
A weekly update on unemployment claims is also planned, as well as activity checks in the services and manufacturing sectors.
Can Tesla achieve strong profit growth?
Tesla will report quarterly results on Wednesday following the highly anticipated ‘We, Robot’ event that took place on October 10.
Wall Street analysts surveyed by Bloomberg expect the EV giant to post adjusted earnings per share of $0.60 on revenue of $25.42 billion. Global deliveries, which improved consecutively for the first time this year, along with a potential increase in automotive gross margins, should help boost profits in the quarter.
However, investors remain on edge about the company’s future investments after last week’s unveiling of the robotaxi failed to meet expectations.
In a letter to customers after the event, Jefferies analysts called the $30,000 self-driving robotaxi, called the Cybercab, a “toothless taxi,” adding that Tesla has “ambitious goals” with “little evidence of feasibility.”
Designed to be fully autonomous, the new Cybercab has no steering wheel or pedals. Production will begin “before 2027,” according to CEO Elon Musk, and will likely be a major talking point at the earnings call.
“Investors can look for details on the rollout of Tesla’s sub-$30,000 vehicle,” Bloomberg Intelligence analyst Steve Man wrote on Friday. “For large sales, the automaker may need to include traditional features such as a steering wheel and pedals in its Cybercabs.”
Tesla shares, which have seen volatile swings in recent months, are down about 10% since the start of the year.
Consumer, labor checks
Retail sales for the month of September were marginally above consensus expectations from earlier last week, indicating that the US economy remains strong. But investors will have more data points to chew on as the final reading of the University of Michigan’s consumer sentiment index is due Friday.
For the latest October reading, sentiment is expected to rise to 69.5, after the index’s preliminary reading unexpectedly fell for the first time in three months to 68.9 in September.
According to the University of MichiganDespite moderating inflation rates, consumers have continued to express frustration with high prices. This had offset the more optimistic view on the labor market, which remains a key focus for the Federal Reserve after cutting rates by 50 basis points at its last meeting.
Markets are currently to introduce a further reduction of 25 basis points in November, but Fed officials appear divided on the way forward.
Earlier this week, San Francisco Federal Reserve President Mary Daly said another rate cut or two this year would still be a “reasonable thing to do” if inflationary pressures continue to ease and the labor market remains on solid footing.
“The work to achieve a soft landing is not yet fully done,” Daly said in her speech on Tuesday. “We are committed to getting that job done.”
But just a day earlier, Federal Reserve Governor Chris Waller said the central bank should be more cautious when it comes to interest rates. He said in a speech at Stanford University: “Data indicate that the economy may not be slowing as much as desired. “
A new round of unemployment claims, due Thursday, will be closely watched based on the number of people filing for unemployment benefits fell back to earth in the week ending October 12.
U.S. jobless claims fell by 19,000 to 241,000, but economists have warned that the labor market could become skewed in the near term due to the aftermath of both Hurricane Helene and Hurricane Milton in the southeastern regions, along with the Boeing labor strike.
“Hurricanes Helene and Milton and the Boeing strike are starting to distort the economic data, but given the timing of those storms – with Helene making landfall on September 26 and Milton on October 10 – the biggest impact on the data is still ahead of us. Oxford Economics wrote this in a note on Friday.
Weekly calendar
Monday:
Economic data: Leading economic index, September (-0.3% expected, -0.2% earlier)
Income: SAP SE (SAP), Nucor Corporation (NUE), HBT Financial (HBT), Zions Bancorporation (ZION), Nucor Corporation
Tuesday:
Economic data: Philadelphia Fed Non-Manufacturing Index, October (-6.1 prior); Richmond Fed Manufacturing Index, October (-21 prior); Richmond Fed Business Conditions (-3 earlier)
Income: General Motors (GM), 3M Company (MMM), RTX Corporation (RTX), Verizon Communications (VZ), GE Aerospace (GE), Lockheed Martin (LMT), Quest Diagnostics (DGX), Philip Morris (PM), Denny’s Corporation (DENN), Sherwin-Williams (SHW), Interpublic Group of Companies (IPG), Norfolk Southern Corporation (NSC), RTX Corporation (RTX), Texas Instruments (TXN), PulteGroup (PHM), Enphase Energy (ENPH)
Wednesday
Economic data: MBA mortgage applications, week ending October 18 (-17.0% prior); Existing home sales, September (3.88 million expected, 3.86 million earlier); Beige Federal Reserve book
Income: Tesla (TSLA), Boeing (BA), AT&T (T), IBM (IBM), Coca-Cola (KO), GE Verona (GEV), T-Mobile (TMUS), Las Vegas Sands (LVS), Hilton Worldwide Holdings (HLT), Whirlpool Corporation (WHR), Mattel (MAT), CME Group (CME), General Dynamics (GD), ServiceNow (NOW), Viking Therapeutics (VKTX)
Thursday
Economic data: Initial unemployment claims, week ending October 19 (240,000 expected, 241,000 earlier); Continuing claims, week ending October 12 (1.87 million previously); S&P Global US Manufacturing PMI, preliminary October (47.5 expected, 47.3 previously); S&P Global US Services PMI, provisional October (55.2 expected, 55.2 previously); New home sales, September (720,000 expected, 716,000 earlier); Kansas City Fed Manufacturing Activity, October (-8 prior); Chicago Fed National Activity Index, September (0.12 earlier)
Income: UPS (UPS), American Airlines (AAL), Southwest (LUV), Dexcom (DXCM), Deckers Outdoor Corporation (DECK), Sketchers (SKX), Coursera (COUR), Dow Inc. (DOW), Honeywell International (HON), Union Pacific Corporation (UNP), Hasbro (HAS), Northrop Grumman Corporation (NOC), Capital One (COF), Beyond, Inc. (BYON)
Friday
Economic data: Durable goods orders, provisional September (-1.0% expected, 0.0% earlier); Sustainable raw materials Ex-Transportation, provisionally September (-0.1% expected, 0.5% earlier); University of Michigan Consumer Sentiment, October Final (69.5 expected, 68.9 prior); Kansas City Fed Services Activity, October (-2 earlier)
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance.