Investing.com Update: Market Performance and Earnings Outlook

Both the S&P 500 and Dow Jones Industrial Average hit new all-time highs on Friday, capping six consecutive weeks of gains.

The S&P 500 rose 0.40%, closing at 5,864.67, while the Dow added 36.86 points, or 0.09%, to settle at 43,275.91. The Nasdaq Composite, buoyed by Netflix's strong post-earnings performance, increased by 0.63% to finish at 18,489.55.

All three indexes notched their sixth straight week in the green. For the S&P 500 and Dow, this marked their longest winning streak of 2024, with weekly gains of 0.85% and 0.96%, respectively. The Nasdaq also advanced 0.80% for the week.

Upcoming Economic Data

Investor attention this week will primarily be centered on new economic data and several significant earnings reports.

According to UBS strategists, claims data is expected to remain volatile, while upcoming flash S&P and Markit PMIs may provide initial insights into October's economic activity. Economists anticipate September's durable goods report to show some softness, potentially impacted by Boeing's production halt.

The Federal Reserve’s Beige Book will offer updates from various regional districts, addressing the potential effects of recent hurricanes, highlighted in next Tuesday's Richmond surveys. Several Fed officials are also scheduled to speak, offering insights into how recent data has influenced their perspectives.

Earnings Season for Tech Sector Underway

More than 70 S&P 500 companies have released their results so far this earnings season, with 75% surpassing expectations, according to FactSet.

Netflix shares surged 11% after exceeding Wall Street's estimates for earnings and revenue in the third quarter, reporting a 35% hike in ad-tier memberships compared to the previous quarter. In contrast, Procter & Gamble posted earnings above forecasts, yet its revenue fell short of expectations.

This week, the spotlight will be on several key earnings reports, particularly from Tesla Inc (NASDAQ:TSLA). Barclays analysts expect Tesla's fundamentals to regain focus, with expected earnings driven by margin improvement and reduced operating expenses, alongside solid regulatory credit revenue. However, the outlook beyond Q3 remains uncertain.

Other major companies reporting earnings this week include General Motors Company (NYSE:GM), Verizon (NYSE:VZ), AT&T (NYSE:T), Coca-Cola (NYSE:KO), Boeing, IBM (NYSE:IBM), and ServiceNow (NYSE:NOW).

Analyst Opinions on US Stocks

Deutsche Bank

“While the recent rally has been strong, difficulties are likely ahead. The S&P 500 nears back-to-back annual gains above 20%, a rarity since 1997-98. Given tight credit spreads, market buoyancy exists, yet recent investor nerves, reflected in early August's turmoil, hint at potential selloff risks amid bad news.”

Wedbush

“A robust Q3 tech earnings season is expected, with enterprise spending, digital advertising rebound, and the AI Revolution likely driving tech stocks higher into year-end and possibly leading to a 20% increase by 2025.”

Goldman Sachs

“The S&P 500 is forecasted to deliver a 3% annualized nominal total return over the next 10 years, with a real return of around 1%. Returns ranging from -1% to +7% depict the uncertainty in future forecasting.”

RBC Capital Markets

“We observe promising signs for the rotation trade from Mega Cap Growth names, with upward EPS estimate revisions favoring larger market cap names in the S&P 500, albeit to a lesser degree than recent months.”

Morgan Stanley

“Stocks that clear lowered EPS estimates from cyclical industries are being rewarded notably this earnings season, reflecting the market's response to softened expectations before earnings announcements.”