Three Things to Watch
- It’s a huge week for earnings, with five of the Magnificent 7 reporting this week. According to Deutsche Bank, the five (Apple, Microsoft, Amazon, Alphabet and Meta) represent $12 trillion in market cap, or 23.2% of the S&P 500. The five biggest S&P 500 companies, all members of the Magnificent 7, are expected to post average earnings growth of 19% (per Bloomberg), the lowest in six quarters, but still well ahead of the S&P 500. Ford, McDonalds, Lilly and Pfizer are some of the other high-profile names set to report this week.
- The economic calendar will see the advanced estimate for third-quarter GDP, the personal consumption expenditures (PCE) price index, consumer spending and personal income. Third-quarter GDP is expected at 3.0%, while core PCE is expected to accelerate to 0.3%, the largest monthly gain in five months, putting the U.S. Federal Reserve’s (Fed’s) favored inflation measure at a year-over-year rate of 2.6%.
- On Friday, the markets will get the October employment report. It is expected to post a nonfarm payroll gain of 110,000, significantly below the recent trend, due to the impact of two hurricanes and Boeing’s strike.
Three Things to Know
- Since peaking on July 10 of this year, the Bloomberg Magnificent 7 Total Return Index is down 2%, while the S&P 500 and Russell 2000 are up 3.5% and 8%, respectively, over the same period. (Source: Bloomberg)
- From 1950 through 2023, the single best day of the year for the S&P 500 is October 28, with an average gain of 0.51%. (Source: Ryan Detrick)
- Since the Fed cut rates 50 basis points on September 18, the 10-year Treasury yield has increased over 50 basis points (from 3.71% to 4.24%). (Source: Benjamin F. Edwards)