Markets This Week, 10/30-11/03, 2023: Economic Growth Still Surging

Economy and Markets: The Week Ahead

Investors’ attention this week will be split between the Federal Reserve’s interest rate policy meeting and the continued earnings report avalanche.

Last week, major U.S. stock indexes closed their worst week in a month, with the S&P 500 (SPX) and the Nasdaq-100 (NDX) officially entering the correction territory. The Nasdaq Composite (NDAQ) deepened the correction, despite strong earnings reports from several large tech companies. The Dow Jones Industrial Average (DJIA) is on the brink of correction,  with a 9% decline from its latest peak. 

Stock volatility shot up as Israel expanded its Gaza operation, leading to a jump in oil prices and weighing on the dollar. Treasury yields dipped from their 16-year high on signs that Core PCE inflation eased last month, in line with expectations. However, yields remained elevated as the stronger-than-expected increase in consumer spending in September, coupled with much stronger-than-projected preliminary GDP growth figures for Q3 2023, suggested that the Fed’s work of bringing down inflation may not be done yet.

In his speech in New York on October 19^th, Fed Chair Jerome Powell warned that hotter-than-expected economic growth could warrant additional monetary policy tightening. While the Federal Reserve is expected to refrain from lifting rates at its meeting on November 1^st, the future actions of the central bank depend on the incoming data. That’s why stock market investors are advised to closely follow economic reports, as these will affect the Federal Reserve’s further monetary policy decisions.

As for the Q3 earnings season, 49% of the S&P 500 companies have reported their actual results, with 78% of them surpassing analysts’ EPS estimates. For now, the blended earnings growth (a combination of actual results and projections for companies that have yet to report) is 2.7% year-over-year. If this figure doesn’t change, it would mark the index’s first quarter of earnings growth since Q3 2022. However, based on companies’ own projections and on outside estimates, as well as on the macroeconomic outlook, analysts have downwardly revised their expectations for Q4 2023 earnings growth to 5.3%, versus their outlook of 8.1% that was made before the start of the earnings season.

In this uncertain environment, investors are recommended to base their decisions on trustworthy data and analysis.

Upcoming Earnings and Dividend Announcements

The Q3 2023 reporting season is in high gear, and there is a flood of reports scheduled this week.

The most noteworthy earnings events this coming week are the reports of Apple (AAPL), McDonald’s (MCD), Arista Networks (ANET), Advanced Micro Devices (AMD), Pfizer (PFE), Airbnb (ABNB), CVS Health (CVS), Electronic Arts (EA), Kraft Heinz (KHC), PayPal (PYPL), Qualcomm (QCOM), Block (SQ), ConocoPhillips (COP), Eli Lilly (LLY), and Moderna (MRNA).

Companies’ reporting dates, consensus EPS forecasts, past data, analyst ratings, and price targets can be found on the TipRanks Earnings Calendar.

This week, Ex-Dividend dates are coming for the payouts of Texas Instruments (TXN), Morgan Stanley (MS), Ford Motor (F), Conagra Brands (CAG), Costco (COST), Constellation Brands (STZ), Lamb Weston Holdings (LW), Citigroup (C), and other dividend-paying firms.

Companies’ Ex-Dividend and Dividend Payment dates, analyst ratings, and price targets can be found on the TipRanks Dividend Calendar.

Upcoming Economic Calendar Events

There are several very important reports scheduled to be published in the next few days:

» October’s Consumer Confidence Index – Tuesday, 10/31 – This report, released by the Conference Board, conveys the level of confidence that consumers have in economic activity. The level of confidence affects consumer spending, which contributes about 70% of the U.S. GDP. Therefore, this index is one of the most important leading indicators.

» October’s S&P Global Manufacturing PMI and ISM Manufacturing PMI – Wednesday, 11/01 – These reports measure business conditions in the manufacturing sector, one of the two main sectors of the U.S. economy, which directly affects economic growth. PMI indices are leading economic indicators used by economists and analysts to gain timely insights into changing economic conditions since the direction and rate of change in the PMIs usually precede changes in the overall economy.

» October’s Nonfarm Payrolls and Unemployment Rate – Friday, 11/03 – The Nonfarm Payrolls and Unemployment reports, released by the U.S. Bureau of Labor Statistics, present the number of new jobs created during the previous month, and the percentage of people that were actively seeking employment in the previous month. These reports are considered two of the most important economic indicators, as policymakers follow the shift in the number of positions since it is strongly associated with the health of the economy as a whole. One of the mandates of the Federal Reserve is full employment, and it takes labor market changes into account when determining its policy decisions, which influence the capital markets.

Current and scheduled economic reports, Fed statements, and other releases, as well as their level of impact on the stock markets, can be found on the TipRanks Economic Calendar.