Stocks rallied this week as earnings season accelerated and so far haven’t gotten off to a better-than-expected start. With 20% of the S&P 500 reporting financials to date, sales results to date are 1.4% higher than expectations while earnings results are 5.4% above expectations. While estimates have dropped in recent weeks, it could signal that investors are becoming too bearish in the short term. This could set us up for more of an advantage if subsequent outcomes are also better than scary. Three major averages were completed for the week. The S&P 500 and Dow Jones Industrial Average rose more than 4%, while the Nasdaq Composite added 5.2%. However, the bond market still stands in an important position. A rise in 2-year Treasuries, reaching a 15-year high of 4.6% on Friday, weighed on stock prices. The negative correlation between bond and stock yields is strong enough to overwhelm positive earnings reports. As a result, we’ve been on pace for a relatively steady week leading up to Friday. But the averages rebounded after a report in The Wall Street Journal hinted that the Federal Reserve could slow the pace of gains beyond 75 basis points expected at its next meeting on Feb. November, reducing the likelihood of a longer and longer deceleration. While that’s not exactly a pivot, it would represent a departure from the hawkish stance the Fed has maintained all year. On Thursday, according to the CME FedWatch Tool, investors were counting on a 75% probability of a 75 basis point rally in December. That number dropped to 45% on Friday. Whether any chatter about future hikes will be enough to limit the rise in Treasury yields, stabilize the major stock averages, and see a slight rebound remains to be seen. are also considered. Regardless of the stock’s short-term path, however, as we discussed Friday, we think a well-balanced and diversified portfolio will position investors for any what happens next. In short, this is a broad-based rally with all sectors higher for the week, led by energy, technology and materials. Meanwhile, the US dollar index hovers around 112. Gold is holding at $1,660 an ounce. WTI crude oil prices remained in the mid-$80 region and the 10-year Treasury yield rose to 4.2%. Looking back at the earnings front, we got results from Johnson & Johnson (JNJ), Procter & Gamble (PG) and Danaher (DHR). Macroeconomics: On Tuesday, industrial production was reported to have grown 0.4 percent in September, beating expectations for a 0.1% monthly gain, while capacity utilization efficiency came in at 80 percent. .3%, higher than the expected 80%. On Wednesday, the amount to start buying a home was reported to have fallen 8.1% month-on-month to a seasonally adjusted annualized (SAAR) level of 1.439 million in September, well below the 1.47 million that the Street had reported. expectations. Building permits rose 1.4% in September, lower than the 1.5% previously expected. On Thursday, initial jobless claims for the week ended October 15 were 214,000, down 12,000 from the previous week and below expectations of 232,000. Also on Thursday, existing home sales were reported to have fallen 1.5% monthly and 23.8% year-on-year in September to SAAR 4.71 million as rising mortgage rates hit affordability. their pay. What’s Ahead Season earnings will rise next week for the Club. In the portfolio, we’ll hear from Halliburton (HAL) on Tuesday before the doorbell opens; from Microsoft (MSFT) and Alphabet (GOOGL) on Tuesday after the closing bell; from Meta Platforms (META) and Ford (F) on the Wednesday after the bell; from Linde (LIN) and Honeywell (HON) on the Thursday before the alarm; from Amazon (AMZN), Apple (AAPL) and Pioneer Natural Resources on Thursday after the closing bell; and from AbbVie (ABBV) on the Friday before the opening bell. Here are some other earnings reports and economic numbers to watch next week: Monday, October 24 Before the alarm goes off: Royal Philips (PHG), Dorman Products (DORM), Bank of Hawaii ( BOH), Schnitzer Steel (SCHN), Kirby Corp (KEX) After the Bell: Logitech (LOGI), Brown & Brown (BRO), Range Resources (RRC), Packaging Corp (PKG), Crane (CR), Discover Fin ( DFS), Zions Bancorp (ZION), Qualtrics (XM), Crown Holdings (CCK) Tuesday, October 25 Before the Bell Rings: United Parcel (UPS), Coca-Cola (KO), General Motors (GM), Cleveland Cliffs (CLF), General Electric (GE), 3M (MMM), Jet Blue (JBLU), Valero (VLO), Raytheon (RTX), Synchrony (SYF), Archer-Daniels (ADM), Kimberly-Clark (KMB) ), Centene (CNC), Novartis (NVS), Sherwin- Williams (SHW), Biogen (BIIB), SAP (SAP) After the bell: Visa (V), Enphase (ENPH), Chipotle (CMG), Spotify (SPOT) ), Texas Instruments (TXN), Mattel (MAT), Chemours (CC) Wednesday, October 26 Before the bell rings: Boeing (BA), Waste Management (WM), B ristol-Myers (BMY), Hilton (HLT), Kra ft Heinz (KHC), Harley-Davidson (HOG), Otis (OTIS), General Dynamics (GD), Thermo Fisher (TMO), Seagate (STX), Boston Scientific (BSX), ADP (ADP) After the Bell: Teledoc (TDOC), ServiceNow (NOW), Quantumscape (QS), Upwork (UPWK), KLA Corp (KLAC), O’Reilly Auto (ORLY), EQT Corp (EQT) ), Align (ALGN), VF Corp (VFC), Agnico-Eagle (AEM), Netgear (NTGR) 10:00 a.m. ET: New Home Sale Thursday, October 27 Before the alarm: Shopify (SHOP) ), Caterpillar (CAT), McDonalds (MCD), Matercard (MA), Southwest (LUV), Merck (MRK), Altria (MO), Western Digital (WDC), Comcast (CMCSA), American Electric Power (AEP), Stanley Black & Decker (SWK), International Paper (IP), Textron (TXT) After the bell: Intel (INTC), Pinterest (PINS), US Steel (X), T-Mobile (TMUS), Gilead (GILD), First Solar (FSLR), Capital One (COF), Dexcom (DXCM), Zendesk (ZEN), L3Harris (LHX) 8:30 a.m. ET: Initial Jobless Claims 8:30 a.m. ET: Durable Goods Orders 8:30 am ET: Gross Product m domestic Friday, October 28 Before the bell: Chevron (CVX), E xxon (XOM), Colgate-Palmolive (CL), Booz Allen (BAH), LuondellBasell (LYB), DaVita (DVA) 8: 30 a.m. ET: Personal Spending (See here for a full list of stocks in the Jim Cramer Charitable Foundation.) 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A trader works on the floor of the New York Stock Exchange (NYSE) in New York, October 7, 2022.
Brendan McDermid | Reuters
Stocks rallied this week as earnings season accelerated and so far haven’t gotten off to a better-than-expected start.
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