Dow Jones Index Earnings, Fed And PMI
Today begins another great week for Wall Street. In particular, the broader markets are triggering all-time highs. The technology companies reporting this week will greatly boost the markets. The Fed will meet for its policy review tomorrow. Later in the week, the U.S. Consumer Sentiment Index and manufacturing PMI will guide markets. The Dow Jones Index (DIA) is only 1.6%, while the S&P 500 (SPY) is about 5 points off their respective all-time highs.
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Earnings will lead the Dow Jones index
Alphabet (GOOGL), Google’s parent company, will post its quarterly earnings today after the markets close. Currently, the company is trading at its all-time high and has gained more than 22% YTD. Recently, Google faced regulatory scrutiny, which investors should observe. Analysts expect the company to report an EPS of $ 12.42, which is almost 5% lower year-on-year. The company beat analysts ‘ estimates, which could open up more upside for stocks. BMO raised its target price from octubre 1,225 to octubre 1,245 on October 25.
Amazon (AMZN) reported its earnings last week. The company missed analysts ‘ EPS estimates. Amazon’s gloomy guide to the holiday season hurt investors the most. In the fourth quarter, the company expects sales between $ 80 billion and 8 86.5 billion, which was below analysts ‘ forecast of.87.37 billion.
AT & T (T) will report its earnings today. The stock was weak before the company’s third-quarter earnings. AT & T forms more than 1% in the S&P 500. Analysts expect the company’S EPS to grow around 4% year-on-year in the third quarter. We will have to look at the prospects of the administration amid increased pressure from activist investors. So far, AT&T shares have risen about 30% this year.
Facebook (FB) and Apple (APPL) will report their earnings on Wednesday. Apple is one of the main components of the Dow Jones index. Recently, the company has seen a noticeable uptrend. For more information, read Why Apple’s Q4 earnings will be unique.
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Mixed earnings so far
According to a report published by FactSet on October 25, among the 200 companies in the S & P 500 that have reported their third-quarter earnings so far, 80% reported a positive EPS Surprise, above their five-year average. Among the 200 companies, 64% reported a positive revenue surprise in the third quarter.
Instead of a lack of profit or beat, it is important to see how companies look to the future. Many economic indicators point to a gloomy picture ahead. Management comments suggest lower investments and weaker earnings growth for next year. Read More, Read Dow Jones could be in trouble, recession fears rise.
For the fourth quarter, 26 S & P 500 companies have issued negative EPS guidance, while 12 companies posted positive EPS guidance, according to FactSet.
Fed and the Dow Jones index
In addition to gains, Fed policy will also boost markets this week. Traders expect more than a 93% chance of a quarter-point rate cut, according to CME’s FedWatch tool. So far, the Fed has delivered two 25-point rate cuts this year. The expected cut would bring the range of federal funds rates to 1.50 – – 1.75%.
Along with Fed policy, we’ll have to see if the central bank hints at more cuts or chooses to pause the cuts. A likely cut could push the Dow Jones index and the S&P 500 towards new highs. However, if the Fed chooses a different path and does not deliver the widely expected rate hike, indices could see some pullback. The Dow Jones index has fallen marginally since the last rate cut in September.
Reading this week’S PMI
Notable economic indicators such as the manufacturing PMI and the Consumer Sentiment Index will come out by the end of the week. The ISM Manufacturing PMI will be important to watch this week. It should be noted that the ISM Manufacturing PMI contracted for the last two consecutive months. The Dow Jones and S&P 500 fell due to last month’s PMI data.
So far this year, the Dow Jones Industrial Average Index has risen nearly 16%, while the S&P 500 has risen more than 20%. Along with quarterly earnings and economic indicators, China’s trade war developments will likely also weigh on Wall Street. The United States and China seemed to be nearing “Phase 1” of the trade agreement. However, the uncertainties of trade talks could drive market volatility until there is a complete resolution.