The U.S. stock market seems set for a soft opening this morning, as another week on Wall Street begins. In the coming days, investors will receive a couple of important inflation readings, along with a few third-quarter earnings reports. Elsewhere, mounting tensions in the Middle East may also have an impact on stocks this week, potentially creating volatility in the oil market. As we were writing this report, the S&P 500 Index futures were down about 22 points (-0.40%) in pre-market trading.
In the economic arena, there will be no major reports released today or tomorrow. However, on Wednesday the FOMC (Federal Open Market Committee) will publish the minutes from its September meeting. Traders will likely be looking over this issuance to gain further insight into the Federal Reserve’s decision-making process. On Thursday, the CPI (Consumer Price Index) for September will be released. Analysts currently think the numbers will show that prices rose roughly 2.3% during the month, on a year-over-year basis. This result would compare favorably to the 2.5% increase logged in August, and would help confirm that inflation is moving in the right direction. The PPI (Producer Price Index) is slated to follow on Friday. It should be noted that investors have been closely watching the nation’s inflation situation, so any unexpected readings could lead to market volatility.
In corporate news, the third-quarter earnings season officially commences this week. On Friday, we will hear from a few of large banks, including JPMorgan Chase (JPM) and Well Fargo (WFC). In addition, BlackRock (BLK), the world’s largest asset manager, will post its numbers. Here, investors will likely want to see how the Federal Reserve’s move to lower interest-rates might impact various companies in the financial sector. Meanwhile, the broader earnings outlook for the third quarter is still supportive, even though some analysts have tempered their expectations, owing to concerns about the economy.
From a technical vantage point, the stock market is not far from high ground, despite recent bouts of volatility. As we progress through the month of October, it remains to be seen if the bulls will be able to push stocks higher from the current level. A strong start to the third-quarter earnings season might help boost investor sentiment. More important than the actual third-quarter numbers will be the guidance provided for the remainder of the year. Elsewhere, the upcoming Presidential election may also have an impact on the market. – Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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