The S&P 500 closed at an all-time high on Tuesday, and next week's bank earnings and inflation data will offer insight into corporate profits and the path of interest rates. Those are two factors influencing the market's rally.
The S&P 500 hit an all-time closing high on Tuesday, its first since mid-August. Its year-to-date gain has swelled to more than 14%.
Quarterly bank earnings and economic releases next week will show US stock investors how strong corporate profits are and where interest rates are heading, according to Reuters. Those are the two factors influencing the rally.
Banks kick off a strong earnings season
JPMorgan, Goldman Sachs, Citigroup and Wells Fargo will report results on Tuesday, with Morgan Stanley and Bank of America following the next day. The reports are expected to start an exceptionally strong quarter for US corporate profits.
S&P 500 earnings are expected to have jumped by more than 30% in the third quarter, according to LSEG IBES. Bank stocks, however, have been among the worst-performing groups recently, and the S&P 500 banks index is down 7.5% in the past month amid a rise in Treasury yields.
CPI could revive rate-hike bets
Wednesday's Consumer Price Index report is among the last key data releases before the Fed meets to decide whether to raise rates again. A Reuters poll expects September CPI to show a 3.7% annual rise, with core CPI estimated at 2.5%.
The Fed hiked rates last month for the first time since 2023 to try to contain inflation. Traders have reduced expectations of another rate hike at the October 27-28 meeting, but data showing a hotter economy could revive those bets, investors said.
Market avoids significant downside as yields pass 5%
The benchmark 10-year yield was around 5.24% late on Friday, after recently reaching its highest level in 24 years. The market has avoided any significant downside as yields breached 5% and moved higher.
Michael Reynolds of Glenmede commented on higher rates. According to Reynolds: "At some point, major indices are going to cry uncle on higher rates,"
Source: Reuters via Investing.com
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