Stocks Closed Mixed Yesterday, Earnings Seasons Ramps Up This Week Stocks closed mostly lower yesterday in uneven trade. The small-cap Russell 2000 led the decliners, giving up -1.60%, while the S&P was only down -0.18%. But the Nasdaq was in the green with 0.27%. After 6 up weeks in a row for the big three indexes, we got off to a rough start for week 7. But the week is young. Earnings season kicks into gear this week. Even though we are only 'officially' about a week into it (2 weeks unofficially), roughly 14% of the S&P 500 constituents have reported so far, with 81.7% of those reporting a positive EPS surprise. And it shows a reassuring picture of a resilient economy with earnings up 6.3% and sales up 4.8%. Today we'll hear from 122 companies on deck to report, with GE Aerospace, Philip Morris and Verizon reporting before the open; and Texas Instruments, Lockheed Martin and Spotify going after the close. We'll also hear from one of the Magnificent 7 later in the week with Tesla reporting on Wednesday, after the close. Five more of the Mag 7 report the following week with Alphabet on 10/29, Microsoft and Meta on 10/30, and Apple and Amazon on 10/31. But there's plenty of earnings before then to keep the market busy. Early yesterday morning, we heard that China cut their lending rates by 25 basis points. That applies to both the one-year and five-year loan rates. It was a widely anticipated move. But makes good on part of a stimulus package that China had announced back in September. Yesterday's rate cut comes on the heels of the European Central Bank (ECB), which cut rates by 25 basis points for the third time this year (with more cuts expected by year's end). The Fed is widely expected to cut rates by another 25 basis points when they meet again on November 6-7. But there will be plenty of other news to hit the market before then, including the Personal Consumption Expenditures (PCE) index (which is the Fed's preferred inflation gauge) on 10/31, the Employment Situation report on 11/1, and then the election on 11/5. And of course, more earnings all throughout. Looking at today, the only economic report on the docket is the Richmond Fed Manufacturing Index, and the Treasury Buyback Announcement. As for the markets, we'll see if they can regroup and build upon last week's gains (last 6 weeks for some). See you tomorrow, Kevin Matras Executive Vice President, Zacks Investment Research |
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