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Investors unpacked a slew of economic indicators this week
Big Tech earnings were the talk of the town this week, and determined much of Wall Street’s price action. Cooling Treasury yields also influenced stocks, with the Dow Jones Industrial Average (DJI) notching its best close since Sept. 12, and stringing together five-straight wins. A better-than-expected gross domestic product (GDP) boosted the blue-chip index as well. Meanwhile, the Nasdaq Composite Index (IXIC) and S&P 500 Index (SPX) cut their three-day rallies short, after Alphabet’s (GOOGL) earnings miss and Microsoft’s (MSFT) sales warning.
Plenty of economic data rolled in as well. Some traders viewed a turn lower in consumer confidence for September and a sharp drop in home prices for August as a sign that the Federal Reserve could soon back off its hawkish policy. Manufacturing and services data disappointed, while unsurprising inflation and steady consumer spending data helped Wall Street brush off dismal quarterly results from Amazon.com (AMZN) on Friday. At the time of this writing, the three major benchmarks were eyeing big weekly wins.
Top Big Tech & Blue Chip Results
Tech and blue-chip stocks experienced varying levels of success in the confessional this week. As previously alluded to, MSFT forecast a drop in personal computer sales, and GOOGL was pacing for its worst day since March 2020 after a third-quarter earnings and revenue miss. AMZN hit a two-year low after predicting slowing sales over the holidays, and Meta Platforms (META) fell to its lowest level in seven years after issuing a weaker-than-expected current-quarter outlook. Apple (AAPL) managed to buck the Big Tech bust, however, after scoring a revenue record.
As far as Dow members are concerned, Caterpillar (CAT) eyed its best month since 2009, after revealing it benefitted from rising equipment and energy prices. Coca-Cola (KO) lifted its full-year profit and revenue guidance after earnings, and call traders took notice. Finally, Boeing’s (BA) dismal quarterly results were made worse by the fact that the stock is running into a surefire bearish trendline.
On Analysts’ Radars
Before META’s post-earnings beating, BofA Global Research downgraded the equity to “neutral”, calling its move to Reels on Instagram and Facebook as a “potential negative for gross margins and long-term competition.” Meanwhile, Jefferies noted that Williams-Sonoma (WSM) is a “poster child” for retailers that over-earned during the pandemic.
It wasn’t all doom and gloom, though — J.P. Morgan Securities said Wolfspeed (WOLF) could jump 50% or more, and Ross Stores (ROST) was called one of the “best ways” to play the retail sector. Weber (WEBR) received a bull note as well, after BDT Capital Partners offered to buy the grill maker for about $1.8 billion.
Fed Announcement to Jumpstart November
October comes to a close next week, and November kicks off at full speed. Both the S&P U.S. manufacturing purchasing managers’ index (PMI) and the Institute for Supply Management (ISM) manufacturing index are due out, in addition to the ADP employment report and nonfarm payrolls. Plus, the Federal Open Market Committee (FOMC) is set to make a big announcement. Some major reports are also on tap, with earnings results to come from Airbnb (ABNB), CVS Health (CVS), DoorDash (DASH), Dropbox (DBX), Etsy (ETSY), Eli Lilly (LLY), PayPal (PYPL), Pfizer (PFE), and Starbucks (SBUX), to name a few. A risk-on phase may be imminent, though, and now is a good time to prepare for Election Day.
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Image and article originally from www.schaeffersresearch.com. Read the original article here.