Q3 Earnings and GDP Numbers to Drive S&P 500 Index This Week
October 23 2022 - 4:04PM
Finscreener.org
The equity indices staged a
turnaround last week after gaining momentum on Friday on the back
of strong earnings results and an indication from the Federal
Reserve that the regulatory body is looking to avoid the
possibility of a recession while trying to cool down
inflation.
In the last five trading
sessions, the
Dow Jones and
S&P 500 indices
gained close to 5%, while the tech-heavy Nasdaq Composite rose over 5%. Comparatively, the yield on the
10-year Treasury note remained elevated at 4.2%, which is the
highest level since the financial crash of 2008.
Oil prices remained largely
unchanged, with the WTI (West Texas Intermediate) crude hovering
around $85 per barrel as economic activity rebounded in China with
lower COVID-19-related restrictions.
Let’s see what will impact the
S&P 500 index and the stock market in the upcoming
week.
FAAMG earnings to be a key driver for Nasdaq Composite
index
The upcoming week will be
extremely busy, given the large number of corporate earnings
scheduled to be reported. Some of the largest and most influential
companies globally will report Q3 earnings in the week ending on
Oct 28.
On Tuesday,
Microsoft (NASDAQ:
MSFT),
Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), Coca-Cola
(NYSE:
KO), and Visa (NYSE: V) will
report third-quarter results. A day later, Meta
Platforms (NASDAQ:
META),
Ford (NYSE:
F), and Boeing (NYSE:
BA) are scheduled to report Q3 results.
Around 20% of the companies have
reported quarterly results already for Q3, and 72% of them,
including Goldman Sachs (NYSE:
GS) and
Netflix (NASDAQ: NFLX), have managed to beat consensus earnings
estimates, according to a report from FactSet. In the last five
years, around 77% of companies have topped Wall Street earnings
estimates.
GDP numbers will be crucial for the S&P 500
index
The BEA or Bureau of Economic
Analysis will publish the U.S. gross domestic product (GDP) for Q3.
This metric typically tracks the country’s growth rate for the
three months that ended in September.
Economists expect the U.S. GDP to
expand at an adjusted annual rate of 2% in Q3 after contracting by
0.6% in Q2 of 2022. An uptick in GDP numbers will be the first
quarter of economic growth since Q4 of 2021.
Generally, two consecutive
quarters of falling GDP rates have been considered a proxy for a
recession. But the strength of the labor market and nominal wage
growth has suggested otherwise.
Housing market under the radar
S&P Global will also
release the Case-Shiller National Home Price Index for August on
Tuesday. Freddie Mac, a mortgage originator, will also publish the
House Price Index for August, which tracks the prices of
single-family homes.
In July, the Case-Shiller index
fell 0.8%, its first monthly decline since January 2018, due to
higher interest rates. On an annual basis, prices surged 16%, which
was still below the 21,2% growth rate in March.
The slowdown in the housing
market is expected to continue in the next year, and prices are
expected to remain unchanged in September.
The U.S. Census Bureau will
report new home sales for September on Wednesday, and the metric is
expected to decline to 630,000 from 685,000 in August. In fact,
sales of newly-built homes have tended lower year-to-date and down
from a high of 839,000 in December 2021.
Finally, the NAR or National
Association of Realtors will release pending home sales for August
that might fall by 2% in August.
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