- This week, the US will unveil the earnings reports of 169 S&P 500 companies.
- Last week, Tesla shares jumped after the company gave upbeat forecasts for sales in 2025.
- The S&P 500 has gained 22% so far this year.
Equities gained on Monday ahead of more tech earnings this week. Last week, Tesla surprised with upbeat forecasts, which boosted market sentiment. At the same time, market participants are watching the upcoming presidential election and economic report before the FOMC meeting.
Q3 Earnings (Source: Bloomberg Intelligence)
This week, the US will unveil the earnings reports of 169 S&P 500 companies. However, market participants will focus on tech giants like Apple, Microsoft, and Amazon. Reports of these companies tend to cause big moves and impact the outlook for the US economy.
Last week, Tesla shares jumped after the company gave upbeat forecasts for sales in 2025. At the same time, sentiment in the broader equities markets improved. Consequently, Nvidia rose to become the world’s most valuable company.
The S&P 500 has gained 22% so far this year despite high interest rates and other limiting macroeconomic factors. This performance came due to better-than-expected earnings and Fed rate cut optimism. The Fed has already started its rate-cutting cycle. However, investors are now expecting a gradual pace. Nevertheless, lower borrowing costs are bullish for stocks as business conditions improve.
However, the future remains uncertain as market participants look forward to more data and earnings. This week, the US will release the all-important nonfarm payrolls report, affecting Fed rate cut expectations. According to forecasts, the US economy might add 111,000 jobs in October. Such an outcome would indicate a slowdown in job growth from the previous month.
At the same time, economists expect the unemployment rate to remain at 4.1%. Another better-than-expected report would show resilience in the US economy that could boost equities. However, it might also lower expectations for a November Fed rate cut.
The Fed will meet in early November after the US election. Investors will watch the messaging and the tone to determine the likely pace and size of future rate cuts. In recent weeks, policymakers have become more cautious, with some seeing just one more rate cut this year. A cautious tone will dampen rate-cut bets, which might hurt equities. However, if earnings are positive, there will still be enough optimism to continue the recent rally.
Meanwhile, given the uncertainty over the outcome, the US election might cause some volatility. A Trump win would likely drive inflation and pause the Fed’s rate-cutting cycle, hurting equities.
