Stocks continued their impressive streak, marking their sixth consecutive week of gains as of Friday, fueled by robust earnings from Netflix that invigorated the technology sector. The focus is now shifting to other heavyweights in the market, particularly the electric vehicle pioneer Tesla, which is scheduled to reveal its quarterly earnings this Wednesday.
The Dow Jones Industrial Average led the charge with a rise of about 1% over the past week. Meanwhile, both the S&P 500 and the tech-centric Nasdaq Composite also saw positive momentum, recording increases of approximately 0.9% and 0.8%, respectively. Notably, the Dow and S&P 500 reached record highs during the week, highlighting a strong market sentiment.
As investors reallocated funds from large-cap tech stocks, utilities emerged as a surprising frontrunner, soaring by 3.4% throughout the week. Real estate and financial sectors followed suit, with respective gains of 3% and 2.4%. Small-cap stocks, too, outperformed the broader indexes, as evidenced by the Russell 2000’s rise of approximately 2%.
This bullish trend is underpinned by a solid earnings season, with 79% of S&P 500 companies surpassing profit expectations for the third quarter, slightly above the five-year average of 77%, according to FactSet’s senior earnings analyst John Butters. The excitement surrounding upcoming reports from notable names such as Tesla, Boeing, General Motors, American Airlines, and UPS keeps investor interest high.
In addition to corporate earnings, economic indicators are also on the radar. This week will feature essential data releases, including the crucial consumer sentiment index from the University of Michigan, scheduled for Friday. The Fed Beige Book, which offers insights into economic conditions across Federal Reserve districts, is set to release on Wednesday, adding to the data pool for the week.
One of the key topics of interest this week is the housing market, as mortgage rates have risen for a third consecutive week, edging closer to the 6.5% mark. Furthermore, jobless claims data will be closely examined after the recent uptick in filings, which decreased to 241,000. Economists warn that the numbers may be influenced by recent weather events and the labor strike at Boeing, leading to potential volatility in economic reporting.
As Tesla gears up to announce its earnings amid heightened anticipation—following the recent unveiling of its “We, Robot” event—investors are eager to see whether the EV company can deliver strong numbers. Analysts predict adjusted earnings per share of $0.60 on revenues of approximately $25.42 billion. Reflecting on the last quarter, global delivery figures improved for the first time in 2024, which could indicate profitability gains.
However, Tesla’s presentation of its new robotaxi model left some investors feeling uncertainty about its future innovations. The autonomous Cybercab, with a starting price of $30,000, lacks traditional driving features, prompting skepticism about its practicality. Experts have emphasized the importance of clarity regarding this new vehicle’s rollout during Tesla’s upcoming earnings call.
Meanwhile, retail sales data from September suggests that consumer strength remains resilient despite ongoing concerns about inflation. The final reading of consumer sentiment is expected to increase slightly, revealing ongoing consumer frustrations—primarily regarding high prices—even as employment figures remain favorable.
The market is currently anticipating more Federal Reserve activity, with speculation around potential interest rate cuts. The mixed signals from Fed officials complicate predictions about the direction of monetary policy as they weigh inflation against economic growth.
This week is poised to be eventful with a slew of economic reports and corporate earnings that will significantly influence market sentiment. Investors are keeping a close watch on these developments, eager to gauge their impact on both immediate market conditions and broader economic trends.