The upcoming earnings season could decide what’s in store for stocks. The S&P 500 and Dow Jones Industrial Average hit all-time highs after a strong jobs report last week and fresher inflation data this week boosted investor confidence in stocks. Technology stocks were stronger this week, with the sector up 2% as investors returned to risk assets. Nvidia advanced more than 7%. And, with earnings season ramping up, that could mean more profits. On average, the S&P 500 advances 2% in the first four weeks of a given reporting period, Oppenheimer said in a note this week. Already on Friday, JPMorgan Chase and Wells Fargo were trading midday after reporting their latest results for the week, an auspicious start to earnings season. Still, investors remain on edge. October, a seasonally weak month, is particularly poor ahead of the US presidential election. Ratings are extended. Traders are trying to understand the path forward for interest rates, with the Federal Reserve remaining highly dependent on weekly economic data. Meanwhile, Treasury yields are rising, with the 10-year yield at 4.1% this week. .SPX YTD mountain S & P 500 “It’s hard to predict the direction of the market right now,” said Charlie Ashley, portfolio manager at Catalyst Funds. “It is a challenge given the dynamics that are playing out in the market, with certain asset classes stretched in terms of valuation, but balanced in the economy and the labor market.” “A lot of that … will come down to the strength of corporate earnings,” Ashley said, pointing to the stock’s near-term direction. As of Friday, the major averages had won for the fifth consecutive week. The Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite rose more than 1% this week. Strong earnings season Next week’s earnings results will be dominated by reports from the banking sector, giving investors more insight into the health of both capital markets and consumers. While recent economic reports, including last week’s September hot jobs number, have eased fears of weaker consumer spending, concerns remain. For example, online bank Ally Financial reported on Friday that shares fell last month after the bank’s finance chief said credit challenges for customers had risen, making its results interesting for market watchers tracking lower-income consumers. ashley Bank of America and Goldman Sachs will report on Tuesday, and Morgan Stanley will report results on Wednesday. Several banks in the region will also announce how they did in the last quarter, such as PNC Financial Services Group and Citizens Financial Group. However, investors are optimistic about the outlook for corporate earnings this earnings season, mainly because expectations have been lowered. As of Friday, the combined third-quarter earnings growth rate was 3.87%, according to FactSet. “Stipulations have come down quite a bit, so there’s a low bar to clear,” said Ross Mayfield, investment strategist at Baird Private Wealth Management. “That’s, you know, all else equal, you’re probably going to know how the stock is going to respond.” Biggest Records In any case, investors have more uncertainty to overcome this month. While many investors continue to expect stocks to rise further, risks surrounding the presidential election, rising Treasury yields and heightened geopolitical risks in the Middle East and elsewhere are weighing on the upside. US10Y 5D mountain 10-year US Treasury yield Catalyst’s Ashley, for example, expects stocks to rise 5% as likely as falling by the same amount. Baird’s Mayfield, meanwhile, said a 5% to 10% pullback in the coming weeks wouldn’t catch him off guard. Still, Mayfield remains bullish, saying the “fundamentals of the bull market” remain intact. He expects the S&P 500 to rise another 5% by the end of the year, and said he will look for opportunities in growth stocks that have taken a breather since the start of the summer. “I would continue to lean on the bull market,” Mayfield said. “I think there’s a lot of room to run.” Next week, investors will get more information on the state of consumer spending with the retail sales report and business inventory data, both due out on Thursday. September data on housing starts and building permits will also give retailers more insight into the state of housing’s contribution to the economy. On Monday, the bond market will be closed for Columbus Day, but the stock market will be open for business. Weekly Schedule All hours ET. Monday, October 14 Columbus Day Bond Market Close Tuesday, October 15 at 8:30 AM Empire State Index (October) Gains: United Airlines , JB Hunt Transport Services , Citigroup , State Street , Goldman Sachs Group , Walgreens Boots Alliance , Johnson & Johnson , Bank of America , PNC Financial Services Group , UnitedHealth Group , Charles Schwab Wednesday, October 16 8:30 am Export Price Index (September) 8:30 am Import Price Index (September) Earnings: PPG Industries , Steel Dynamics , Discover Financial Services , CSX , Prologis , Morgan Stanley , Abbott Laboratories , US Bancorp , Citizens Financial Group , Synchrony Financial Thursday, October 17 at 8:30am Continued Jobless Claims (10/05) 8:30am Initial Claims (12/10) 8:30am Philadelphia Fed Index (October) 8:30 a.m. Retail Sales (September) 9:15 a.m. Capacity Utilization (September) 9:15 a.m. Industrial Production (September) 9:15 a.m. Manufacturing Production (September) 10:00 a.m. Business Inventories (August) 10:00 a.m. NAHB Housing Market Index (October) Earnings: Intuitive Surgical , Netflix , KeyCorp , M & T Bank Corp ., Elevance Health , Truist Financial , Huntington Bancshares , Blackstone Friday, October 18 8:30 a.m. Pre-Building Permits (September) 8:30 a.m. Housing Starts (September) Earnings: Schlumberger NV, Procter & Gamble, Fifth Third Bancorp, Regions Financial, American Express, Ally Financial
