Dow Jones, Nasdaq, S&P 500 weekly preview: Focus on Middle East, CPI and Q3 earnings
The S&P 500 (SPX) closed 0.5% higher after a strong rally on Friday, following the release of the jobs data for September. Stocks rallied as the report shows that wage growth continues to slow down, fueling optimism that the Fed may not have to hike again.
However, the U.S. stock index futures slid on Monday after Hamas’s surprise attack on Israel over the weekend, which sent global markets into risk-off mode.
“The conflict’s course is uncertain, but will very likely escalate, possibly contributing to a significantly risk-off global environment over the next 1-3 months,” wrote the Chief Geopolitical Strategists at Alpine Macro.
Elsewhere, the Dow Jones Industrial Average (DJI) fell 0.3% despite stocks rallying sharply on Friday. The index still closed below its 100 daily moving average.
On the other hand, the Nasdaq Composite Index (IXIC) rose as much as 1.6% as tech stocks led the rally on Friday.
CPI and Earnings in Focus
On the economic data front, PPI and Core PPI data are out on Wednesday, followed by the release of the FOMC meeting minutes. Thursday will see the release of the latest inflation figures, which is the key highlight of the week.
“We forecast headline and core CPI increased by 0.3% m/m (0.25% unrounded) and 0.2% m/m (0.24% unrounded) respectively. Used car prices should drive a decline in core goods prices, while shelter should continue to boost core services,” BofA economists said in their CPI preview.
The third quarter earnings season is about to start later this week the major U.S. banks set to report on Friday.
According to consensus estimates, there is an expected 2% growth in sales, a 55 basis point (bp) margin contraction to 11.2%, and flat earnings per share compared to the previous year.
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