The US stock market is gearing up for a potential mixed start on Monday, despite ending the previous week on a positive note. This week marks a significant shift in market focus, as earnings season kicks into high gear. Investors will be keenly watching the performance of major companies like Tesla, Boeing, and General Motors, among many others, as they unveil their financial results throughout the week. With nearly one-fifth of S&P 500 companies scheduled to report this week, the earnings season is expected to provide a significant boost to the market. FactSet, an analytics firm, anticipates a fifth straight quarter of earnings growth for S&P 500 companies. Notably, 79% of the 14% of S&P 500 companies that have already reported have exceeded analysts’ expectations.
Beyond the earnings announcements, the housing market will also be a focal point for investors. Important housing data releases are scheduled for later in the week, offering insights into the health of this crucial sector.
Looking back at last week’s performance, the energy sector lagged behind other sectors, primarily due to factors such as slowing economic growth in China and a surge in US oil production. This resulted in a sharp decline in WTI crude prices, dropping over 8%. Despite these headwinds, the Dow Jones Industrial Average and the S&P 500 Index reached new intraday highs on Friday.
Analysts are generally optimistic about the market’s outlook. Ryan Detrick, Chief Market Strategist at Carson Group, highlights the positive trend for the S&P 500, noting that the index has risen in 10 out of the last 11 months. Detrick emphasizes the significance of sustained bull markets, stating that once a bull market surpasses its second birthday, it tends to endure for many years. This insight suggests a strong outlook for investors as the current bull market matures.
Nathan Peterson, Director of Derivatives Analysis at the Schwab Center for Financial Research, concurs with the bullish sentiment, focusing on the importance of earnings next week. While he doesn’t anticipate a significant pullback, he believes the path of least resistance remains upward. However, he cautions that if earnings momentum reverses, investors might opt to book profits.
This week’s economic calendar features a light schedule, but housing market data is expected to influence investor sentiment. Existing home sales data for September will be released on Wednesday, followed by new home sales data on Thursday.
In pre-market trading, Boeing Co. shares surged by 3.8% after the company secured a substantial order for five additional Boeing 777 freighters from Emirates SkyCargo. Tesla, Inc. shares dipped slightly, down by 0.8%, following a marginal decline on Friday. Nvidia Corp. saw a slight increase, up 0.33%, building on Friday’s gains. Bank of America Corp. shares fell by 0.3% in pre-market trading after the company announced the extension of guaranteed exchange rates by up to a year.
Commodities, bonds, and global equity markets are also showing some signs of movement. Crude oil futures rose nearly 1.65% in early New York trading, boosted by China’s decision to lower its key lending rates in a bid to support its economy. The 10-year Treasury note yield saw a marginal increase to 4.126%.
In Asia, most major markets closed lower on Monday, with Chinese markets edging down amidst economic growth concerns. European stocks showed tentativeness, trading mostly lower in early trading.