All three major U.S. benchmarks are eyeing a fifth-straight weekly win
The Dow Jones Industrial Average (DJI), S&P 500 Index (SPX) and Nasdaq Composite (IXIC) have had a volatile few days, but all are eyeing a fifth-straight weekly win. The beginning of the week was unsettling as oil prices and Treasury yields rose, sending the Cboe Volatility Index (VIX) back above the key 20 level. By midweek, everything cooled down ahead of the Federal Reserve’s meeting minutes, key inflation data, and a deluge of earnings reports.
While the CME’s FedWatch tool shows an 87% chance of a 25 basis-point hike in November, internal division shown in the central bank’s meeting minutes sowed doubt on the matter. Amid this backdrop, September’s consumer price index (CPI) was hotter than expected, and the follow-up producer price index (PPI) that was in line with estimates did little to boost sentiment. Now, investors are turning their attention toward the beginning of earnings season for more insight into the health of the U.S. economy.
Earnings Season and Other Big News
The banking sector helped to kick off the fourth-quarter earnings season. Wells Fargo (WFC) and JPMorgan Chase (JPM) both reported third-quarter results that bested Wall Street’s estimates, with the latter getting a boost from higher-than-expected interest income. Delta Air Lines (DAL) also chimed in with quarterly results, though it missed top- and bottom-line estimates and issued a gloomy fourth-quarter revenue outlook. Coca-Cola (KO) rival PepsiCo (PEP) also reported third-quarter financial figures.
Outside of earnings, Telsa (TSLA) stock took a step back as its highly-anticipated product unveiling failed to impress analysts. DocuSign (DOCU) hit a 52-week high, after the equity replaced MDU Resources (MDU) on the S&P MidCap 400. Meanwhile, Rio Tinto (RIO) revealed its move into the lithium market via a $6.7 billion acquisition of U.S.-based Arcadium Lithium (ALTM).
Analysts Continue to Dish Out Notes
Starting with the bad, Apple (AAPL) and Amazon.com (AMZN) — two Big Tech stalwarts — were among the names that were downgraded this week, the former to “hold” and the latter to “equal weight.” Homebuilding concern KB Home (KBH) was also hit with a bear note, with Wells Fargo saying it could fall behind its sector peers. It wasn’t all doom and gloom, however. TD Cowen upped its price target on Chewy (CHWY) to a nearly 30% premium to Tuesday’s close, while Reddit (RDDT) got new bullish analyst coverage and a Street-high price target. Finally, Wells Fargo stock got a pre-earnings bull note from Wolfe Research.
Earnings Season Ready to Get Fully Underway
Earnings season kicks into full gear next week, with reports from multiple bank names, plus Johnson & Johnson (JNJ), Netflix (NFLX), PNC (PNC), Procter & Gamble (PG), and Walgreens Boots Alliance (WBA) are all scheduled to report. Plus, more employment and housing data is just around the corner.
Make sure to check out Schaeffer’s Senior Quantitative Analyst Rocky White’s breakdown of the benefits of owning both stocks and commodities, as well as Senior V.P. of Research Todd Salamone’s breakdown of a key SPX pivot point.