On September 21, 2021, traders work on the trading floor of the New York Stock Exchange (NYSE).
Bren Dank Demead | Reuters
At present, the stock market seems to have moved away from the usual creepy trading patterns in October, and whether this will continue may depend on earnings in the coming week.
Dozens of companies are reporting from Netflix and Tesla to Intel, Procter & Gamble and American Express. Railways, airlines, healthcare, technology, financial companies, energy and consumer products companies all report in the first wave of reports.
The stock market has moved higher in the past week. As of Friday afternoon, the small-cap Russell 2000 index rose more than 2.1%. Cyclical sectors such as materials, industrials and consumer discretionary all performed well, while the technology sector rose 2.3%. The best performing sector is real estate investment trusts, which rose more than 3.7%.
Paul Hickey, the co-founder of Bespoke, said: “Unlike the previous earnings season we have seen recently, in terms of analyst corrections, expectations for entering this earnings season are more moderate.” “This tends to It lowers the threshold, which makes the earnings season easier to manage. Volatility is synonymous with “down”. Manageable is synonymous with “up”. This is a good setting, and the market has been falling until the earnings season.”
Hickey said that it is unclear whether the strong stock market gains in the past few trading days indicate that the generally negative tone in October has been completely cleared.
“Once we have completed all these earnings reports that will be released next week, we will have a better idea,” he said. “This is going to be a big problem. So far, the initial response has not been too bad, especially considering all people’s concerns about headwinds. Everyone is very concerned about supply chain issues and inflation, and the reported company’s maintenance Pretty good.”
Hickey pointed out that Nike’s stock price has recovered most of the decline after discussing supply issues in its first-quarter report on September 23.
Major banks such as Citigroup, Goldman Sachs and Bank of America have reported strong quarterly results in the past week. According to Refinitiv’s I/B/E/S data, in addition to banks, the financial industry, including insurance and credit card companies, is currently expected to achieve 30.7% profit growth. Based on estimates and actual third-quarter reports, the overall profits of S&P 500 companies are expected to grow by 32%.
Refinitiv said that so far, the company’s performance has exceeded expectations by 15.6%, while the long-term average is 4%, but below the average of 18.4% in the past four quarters. The energy industry is expected to have the largest increase in profits, reaching an alarming 1,517%, while the utility industry has the lowest increase in profits at only 0.2%.
Jonathan Golub, chief U.S. equity strategist at Credit Suisse, said: “Some smaller groups are turning off the lights, but this is different from Unigroup.” “Roughly speaking, the cyclical sector is expected to grow by 96% this quarter. Technology The sector is expected to grow by around 25%…I think the story here is that the financial and cyclical part of the market is really surprising, because “as long as you have interruptions. As long as the interruption continues, it will benefit certain companies. It may be temporary, but it may last for a year or two. ”
Golub said that if only some groups are profitable winners, this may bring risks to the market. “If we can get a total increase of 8% to 10%, but it is supported by a small part of the market, and the median company does not provide stronger earnings data, it is negative,” he said. “This is one of my concerns about the earnings season.”
Golub said that investors have been worried that profit margins will be squeezed due to rising input costs, but he said that the bigger concern is that the company cannot deliver because they have no products.
“They received the order. They couldn’t complete the order, and they couldn’t book the sale. That’s the risk here. I think it’s real. Inventory is being adjusted further, and the backlog is being adjusted further. Delivery time is getting farther and farther,” Golub Say. “This is the risk.”
Golub predicts that by the end of 2021, the Standard & Poor’s 500 Index will rise from the current 4,470 points to 4,600 points. He said that he thinks nothing will undermine this expectation. He expects cyclical stocks to perform better, but technology stocks may just be market performance.
“[Tech’s] The growth in the next 12 months is not impressive and the costs are disproportionately high,” he said. Sales growth is expected to be weaker than in other markets. If this is just the current quarter, it will be one thing, but it is not the case. This is the next 12 months.”
He said: “If interest rates and everything are in line with technology, that would be great.” But he said that he doesn’t think technology will become a leader next year. “I think they will be market performers, but I think they will be the winners in the next ten years-100%.”
The yield on the 10-year U.S. Treasury note, which particularly affects technology stocks and growth stocks, was reported at 1.57% on Friday, after rising to 1.60% last week.
In addition to earnings, there are some economic reports worthy of attention, including Thursday’s existing home sales and the Philadelphia Federal Reserve Manufacturing Survey. On Friday, Markit manufacturing and service industry PMI data will be released. The Fed’s Beige Book on the economy was released on Wednesday afternoon.
The first Bitcoin futures exchange-traded fund may begin trading next week, when the ProShares Bitcoin Strategy ETF is expected to make its debut. A source told CNBC that if the US Securities and Exchange Commission objected to the ETF’s application before midnight on Monday, it could still retain the ETF, but this is unlikely.
As investors bet that ProShares and other cryptocurrency-based ETFs will soon begin trading, Bitcoin rose above $60,000 for the first time in 6 months.
One week in advance calendar
income: Albertsons, State Street, Zions Bancorp, FNB, Steel Dynamics
8:30 am Business Leadership Survey
9:15 am Industrial production
10:00 AM NAHB investigation
4:00 p.m. TIC data
income: Netflix, Johnson & Johnson, Procter & Gamble, Travelers, United Airlines, Synchrony Financial, Halliburton, Manpower Group, Kansas City Southern, Bank of NY Mellon, Fifth Third, Intuitive Surgical
8:30 AM Housing starts
11:00 am Mary Daly, Chairman of the San Francisco Federal Reserve Bank
1:00 PM Rafael Bostic, President of the Federal Reserve Bank of Atlanta
2:00 p.m. Bostic of the Atlanta Fed
income: Tesla, Verizon, IBM, Lam Research, CSX, Baker Hughes, Abbott Laboratories, Nasdaq, Biogen, Knight-Swift Transportation, Canadian Pacific Railway, Northern Trust, Tenet Healthcare, PPG Industries, SLM
12:00 pm Bostic of the Atlanta Fed
12:00 noon Charles Evans, Chairman of the Chicago Federal Reserve Bank
1:45 p.m. St. Louis Fed President James Brad
2:00 p.m. Beige Book
Dali of the San Francisco Fed at 8:35 p.m.
income: AT&T, Intel, Blackstone, Union Pacific, Chipotle Mexican Grill, Snap, Whirlpool, Celanese, Southwest Airlines, AutoNation, American Airlines, KeyCorp, Crocs, Marsh and McLennan, Ally Financial, Freeport-McMoRan, Nucor, Quest Diagnostics, Mattel, original parts, Alaska Airlines, tractor supply
8:30 in the morning, the number of people applying for unemployment benefits for the first time
8:30 am Philadelphia Federal Reserve Manufacturing
10:00 AM Existing Home Sales
income: Honeywell, American Express, Schlumberger, Regions Financial, Roper, VF Corp, HCA Holdings, Seagate Technology
9:45 am Manufacturing Purchasing Managers Index
9:45 am Service Industry Purchasing Managers Index
10:00 am San Francisco Fed’s Daly
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