In one of my recent posts I wrote that the trend for the market is very uncertain at the moment and very dependent on news.
This week will bring some of the news that will determine the market trend.
Here’s a list in order of my sense of importance to the markets.
Thursday, October 12, sees the release of the CPI inflation report for September. The report is expected to show inflation running at the same the as in August. All-items CPI is expected to have risen 4.1% over last year in September, a slowdown from the 4.3% annual increase seen in August. Monthly core inflation is are expected at 0.3%, equal to the monthly increase seen in August. Anything above that number will buttress the case for an interest rate increase by the Fed at its November 1 meeting.
Wednesday, the Federal Reserve releases the minutes from its September meeting. We’ll get color on the Fed’s intentions on rates for the rest of the year and, more importantly in my book, a read on how unified the Fed was in its decision to pause rate increases.
Tuesday marks the start of earnings season for the third quarter with PepsiCo (PEP) scheduled to release earnings. Wall Street is looking for the company to report $2.17 a share for this quarter against $1.93 a year ago. Delta Air Lines (DAL) will report on Thursday, October 12, with Wall Street expecting $1.91 a share against $1.51 a year ago. Together these two stocks will give investors something of a read on the consumer economy.
Bank earnings, however, are much more important to the market right now, JPMorgan Chase (JPM)is scheduled to report on Friday, October 13, and Wall Street is expecting very solid earnings of $3.85 a share versus $3.12 a year ago. I think there’s a good chance that JPMorgan will beat those estimates. Wall Street is expecting much less from Wells Fargo (WFC) and Citigroup (C), also set to report on Friday. Analysts estimate that Wells Fargo will report $1.23 a share against $1.30 a year ago. Citigroup is expected to report $1.26 versus $1.50 a year ago. I think these expectations are so low that the two banks are likely to report modest surprises. Which would be a big plus for a financial market worried about the impact of higher interest rates. Wall Street is expecting the financials sector to report year-over-year earnings growth of 8.7%, the fourth-highest growth rate out of all 11 sectors, according to FactSet.
Monday was a bond market holiday. However, the U.S. stock market was be open.Back to normal order tomorrow.
