The recent tumultuous days for the Dow Jones Industrial Average (DJI), S&P 500 Index (SPX), and Nasdaq Composite (IXIC) have left investors on the edge of their seats, even as the indices aim for a fifth consecutive weekly gain. The action kicked off on a shaky note, with a surge in oil prices and Treasury yields propelling the Cboe Volatility Index (VIX) beyond the pivotal 20 mark. Come midweek, the dust settled as anticipation built around the Federal Reserve’s meeting minutes, crucial inflation figures, and a flurry of earnings releases.
While the market odds, as per CME’s FedWatch tool, heavily favor a 25 basis-point rate hike in November, internal rifts evidenced in the central bank’s meeting minutes have cast a shadow of uncertainty. Against this backdrop, September’s consumer price index (CPI) came in hotter than predicted, and the subsequent producer price index (PPI), meeting expectations, failed to inject optimism. Now, all eyes are on the commencement of the earnings season to gauge further insights into the state of the U.S. economy.
Impacts of Earnings Season and Other Noteworthy Events
The financial sector spearheaded the fourth-quarter earnings wave, with Wells Fargo (WFC) and JPMorgan Chase (JPM) surpassing Wall Street estimates in their third-quarter reports, the latter benefiting from unexpected interest income. Meanwhile, Delta Air Lines (DAL) posted quarterly results below expectations and painted a pessimistic picture for fourth-quarter revenue. PepsiCo (PEP), a Coca-Cola (KO) rival, also released its Q3 financial data.
Beyond earnings, Tesla (TSLA) shares dipped post an underwhelming product unveiling, while DocuSign (DOCU) reached a 52-week high following its inclusion in the S&P MidCap 400 index after replacing MDU Resources (MDU). On another front, Rio Tinto (RIO) made headlines with its foray into the lithium market via a hefty $6.7 billion acquisition of U.S.-based Arcadium Lithium (ALTM).
Analysts’ Opinions and Market Notes
Apples (AAPL) and Amazon.com (AMZN) faced downgrades this week, along with the homebuilding company KB Home (KBH), which was cautioned by Wells Fargo about lagging behind its industry counterparts. In a more positive light, Chewy (CHWY) received an optimistic price target boost from TD Cowen, while Reddit (RDDT) garnered new bullish coverage and a Street-high price target. Additionally, Wells Fargo stock received a bullish pre-earnings note from Wolfe Research.
Full Swing into Earnings Season
The upcoming week promises a flurry of activity as multiple banks, Johnson & Johnson (JNJ), Netflix (NFLX), PNC (PNC), Procter & Gamble (PG), and Walgreens Boots Alliance (WBA) gear up to share their reports. Alongside these, more insights on employment and housing data are rounding the corner.
Make sure to explore Schaeffer’s Senior Quantitative Analyst Rocky White’s take on the perks of holding both stocks and commodities, and Senior V.P. of Research Todd Salamone’s insights on a crucial SPX pivot point.
