As we approach the end of October 2024, the financial markets are bracing for a week laden with significant economic updates and corporate earnings that could sway investor sentiment and market direction significantly. Here’s what investors and market watchers should keep an eye on:
Big Tech Earnings Reports The week sees the release of third-quarter earnings from some of the biggest names in technology, including Alphabet (Google), Apple, Microsoft, Amazon, and Meta Platforms. These companies, often referred to as the “Magnificent Seven” due to their disproportionate influence on the S&P 500, are expected to deliver insights into not just their financial health but also broader trends in digital advertising, cloud computing, consumer electronics, and e-commerce. Given their market cap and influence, their performance could set the tone for broader market movements.
- Alphabet (Google) and Meta (formerly Facebook) – Their earnings will spotlight the health of the digital advertising market, which has been under scrutiny with shifts towards privacy and changes in consumer behavior post-COVID.
- Apple and Amazon – These giants will reveal consumer spending trends, particularly in electronics and online retail, sectors that have both boomed and faced challenges in the post-pandemic era.
- Microsoft – With its extensive cloud services and enterprise solutions, Microsoft’s earnings could reflect corporate spending on digital transformation, a trend accelerated by remote work dynamics.
Economic Indicators
- Personal Consumption Expenditures (PCE) Index: Released on October 31, this index, preferred by the Federal Reserve as an inflation gauge, will offer fresh data on consumer spending and inflation trends. A rise in PCE could harden expectations for monetary policy adjustments, potentially affecting tech valuations sensitive to interest rate changes.
- Jobs Report: The October Jobs Report, concluding the week, is crucial. It will detail nonfarm payrolls, unemployment rates, and wage growth, providing a snapshot of the labor market’s health. This report could influence the Fed’s future rate decisions, with strong job growth possibly signaling continued rate hikes or, conversely, prompting adjustments in expectations if growth slows.
The market is currently trading near record highs, buoyed by a combination of economic recovery signals and anticipation around fiscal policy. However, with inflation showing signs of cooling but still above the Fed’s comfort zone, the balance between inflation control and economic growth remains delicate. Big Tech earnings could either affirm the market’s valuation or signal a need for a reassessment, especially if companies like Apple or Amazon report margins squeezed by logistics costs or if Google and Meta face ad revenue slowdowns due to privacy changes.
This week’s data could significantly shape market expectations for the Federal Reserve’s next moves, especially concerning interest rates. A dovish or hawkish stance from the Fed, hinted through these reports, could either accelerate or decelerate the market’s upward trajectory, particularly affecting tech stocks that thrive in low-rate environments.
For investors, this confluence of earnings and economic data presents both risks and opportunities. While the tech sector’s performance might drive immediate market reactions, the broader economic indicators will set the stage for longer-term investment strategies, navigating through what promises to be a volatile but informative week in late October 2024.
Weekly Calendar
Monday
Economic data: Dallas Fed manufacturing activity, October (-9 expected, -9 prior)
Earnings: Ford (F), Philips (PHG), Waste Management (WM)
Tuesday
Economic data: S&P CoreLogic 20-city year-over-year NSA, August (5.92% prior); Conference Board consumer confidence, October (99.0 expected, 98.7 prior) JOLTS job openings, September (7.9 million expected, 8.04 million prior); Dallas Fed services activity, October (-2.6 prior)
Earnings: Alphabet (GOOGL,GOOG), AMD (AMD), BP Oil (BP), Chipotle (CMG), Crocs (CROX), McDonald’s (MCD), JetBlue (JBLU), Paypal (PYPL), Pfizer (PFE), Reddit (RDDT), Royal Caribbean Group (RCL), Snap (SNAP), Sofi (SOFI), Visa (V)
Wednesday
Economic data: MBA Mortgage Applications, week ended Oct. 25 (-6.7% prior); ADP private payrolls, October (+100,000 expected, +143,000 prior); GDP annualized quarter-over-quarter, third quarter advance estimate (3% expected, 3% prior); Core PCE Price Index quarter-over-quarter, third quarter advance (+2.8% prior); Pending home sales month-over-month, September (0.6% prior)
Earnings: ADP (ADP), Caterpillar (CAT), Carvana (CVNA), Coinbase (COIN), Etsy (ETSY), Eli Lilly (LLY), Microsoft (MSFT), Meta (META), Roku (ROKU), Robinhood (HOOD), Starbucks (SBUX)
Thursday
Economic data: Core PCE index month-over-month, September (+0.2% expected, +0.1% prior); Core PCE index year-over-year, September (+2.6% expected, 2.7% prior); Initial jobless claims, week ending Oct. 26 (227,000 prior); Continuing claims, week ending Oct. 19 (1.897 million prior); Employment cost index, third quarter (0.9% expected, 0.9% prior); Challenger jobs cuts, year-over-year, October (+52.4% prior); Personal income, September (+0.4% expected, +0.2% prior); Personal spending, September (+0.4% expected, +0.2% prior); MNI Chicago PMI, October (46.6 prior)
Earnings: Apple (AAPL), Amazon (AMZN), Conoco Phillips (COP), Estee Lauder (EL), Kellanova (K), Intel (INTC), Mastercard (MA), Norwegian Cruise Lines (NCL), Peloton (PTON), Merck (MRK), SiriusXM (SIRI)
Friday
Economic calendar: Nonfarm payrolls, October (+125,000 expected, +254,000 prior); Unemployment rate, October (4.1% expected, 4.1% previously); Average hourly earnings, month-over-month, October (+0.3% expected, +0.4% prior); Average hourly earnings, year-over-year, October (+4% expected, +4% prior); Average weekly hours worked, October (34.2 expected, 34.2 prior); Labor force participation rate, (62.7% previously); S&P Global US Manufacturing PMI, October final (47.8 prior); ISM manufacturing, October (47.6 expected, 47.2 prior); ISM prices paid, October (48.3 prior)
Earnings: Charter Communications (CHTR), Dominion Energy (D), fuboTV (FUBO), Chevron (CVX), Exxon Mobil (XOM), Wayfair (W)
Shayne Heffernan
