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What you need to know this week

Stocks are entering one of the busiest weeks of the year near record highs.

A late-week rally led by a rise in Tesla (TSLA) shares helped the Nasdaq Composite end the week higher by about 0.9%, just shy of a new record high. Meanwhile, the S&P 500 (GSPC) fell more than 0.3% and the Dow Jones Industrial Average (DJI) fell more than 2.6%.

In the coming week, an update on the Federal Reserve’s favorite inflation gauge, the October jobs report and the earnings of Big Tech giants Alphabet (GOOGL,GOOG), Apple (AAPL), Amazon (AMZN), Microsoft (MSFT) and Meta (META) will determine the direction of the markets at the start of November.

Updates on third-quarter economic growth, vacancies, service and manufacturing sector activity and consumer confidence are also on the calendar.

A busy week of corporate earnings awaits, with 169 members of the S&P 500 expected to report quarterly results. Ford (FORD), AMD (AMD), McDonald’s (MCD), Eli Lilly (LLY) and Exxon (XOM) will be among the companies highlighting the scheme.

A slew of economic data in the coming week will test investor expectations. First, the Bureau of Economic Analysis will release its preliminary estimate for third-quarter gross domestic product (GDP) on Wednesday. The US economy is expected to continue on its solid path, growing at an annualized rate of 3% in the quarter, in line with growth in the second quarter.

The latest status of the Fed’s preferred inflation gauge will be published on Thursday. Economists expect the annual core PCE – which excludes volatile food and energy categories – to reach 2.6% in September, up from 2.7% in August. Economists predict core PCE will be 0.3% last month, up from 0.1% the month before.

On Friday, the Bureau of Labor Statistics will take a fresh look at the national employment situation. The October jobs report is expected to add 125,000 nonfarm payroll jobs to the U.S. economy, with the unemployment rate holding steady at 4.1%, according to Bloomberg data. In September, the U.S. economy added 254,000 jobs while the unemployment rate fell to 4.1%.

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“After two hurricanes, a strike and continued furloughs, we expect a lot of buzz in next Friday’s October employment report,” Michael Reid of RBC Capital Markets wrote in a note to clients on Thursday.

Given the variety of factors that could weigh on job growth, Reid wrote that the unemployment rate “will deliver the best reading in the labor market this month.”

Entering the busy economic data week, markets are estimating a 96% chance that the Federal Reserve will cut rates at its November meeting, according to the CME FedWatch Tool.

Now that 37% of the S&P 500 have reported quarterly results, the index is targeting 3.7% annualized earnings growth. This would be the slowest annual growth rate since the second quarter of 2023, according to FactSet.

Big Tech’s gains will test that narrative in the coming week. FactSet recently pointed out that the “Magnificent Seven” tech stocks are expected to grow their profits 18.1% year over year this quarter, while the other 493 companies in the S&P 500 are expected to grow just 0.1%.

After a tech rally at the end of the week brought some Big Tech names back close to record highs, Apple, Alphabet, Amazon, Meta and Microsoft are all expected to report quarterly earnings in the coming week. The reports will bring artificial intelligence fully into focus again. Investors will be listening for clues about how much these companies are spending on the emerging technology and whether or not it’s boosting profits.

Given the recent surge in Big Tech stocks, Nancy Tengler, CEO and chief investment officer of Laffer Tengler Investments, warned Yahoo Finance of possible muted reactions to the earnings releases.

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“There is a risk that you will see a name like Microsoft beat [estimates]They historically do that about 76% of the time on an earnings basis, and you may not get anything out of the stock price,” Tengler said.

The economic figures have positively surprised Wall Street last month. The Citi Economic Surprise index, which measures whether economic data are better or worse than expected, rose to the highest level since April.

This coincided with a rise in 10-year Treasury yields (^TNX), which have risen about 50 basis points over the past month to around 4.2%. In some cases, higher interest rates can be a headwind for stocks. But as Callie Cox, chief market strategist at Ritholtz Wealth Management, noted in

‘A gradual step up [in yields] … for the right reasons, with the expectation of higher growth, historically it has often been good for these earnings growers,” Gargi Chaudhuri, chief investment and portfolio strategist at BlackRock Americas, told Yahoo Finance. your portfolio remains very important .”

Weekly calendar

Monday

Economic data: Dallas Fed Manufacturing Activity, October (-9 expected, -9 earlier)

Income: Ford (F), Philips (PHG), Waste Management (WM)

Tuesday

Economic data: S&P CoreLogic 20-city year-over-year NSA, August (5.92% prior); Conference Board Consumer Confidence, October (99.0 expected, 98.7 prior) JOLTS Jobs, September (7.9 million expected, 8.04 million prior); Dallas Fed services activity, October (-2.6 prior)

Income: Alphabet (GOOGL,GOOG), AMD (AMD), BP Oil (BP), Chipotle (CMG), Crocs (CROX), McDonald’s (MCD), JetBlue (JBLU), Paypal (PYPL), Pfizer (PFE), Reddit ( RDDT), Royal Caribbean Group (RCL), Snap (SNAP), Sofi (SOFI), Visa (V)

Wednesday

Economic data: MBA mortgage applications, week ending October 25 (-6.7% prior); ADP private payrolls, October (+100,000 expected, +143,000 earlier); Annualized GDP, quarter-on-quarter, third quarter advance estimate (3% expected, 3% earlier); Core PCE Price Index quarter-on-quarter, third quarter progress (+2.8% prior); Pending home sales month-on-month, September (0.6% earlier)

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Income: ADP (ADP), Caterpillar (CAT), Carvana (CVNA), Coinbase (COIN), Etsy (ETSY), Eli Lilly (LLY), Microsoft (MSFT), Meta (META), Roku (ROKU), Robinhood (HOOD) , Starbucks (SBUX)

Thursday

Economic data: Core PCE index month-on-month, September (+0.2% expected, +0.1% prior); Core PCE index year-on-year, September (+2.6% expected, 2.7% earlier); Initial unemployment claims, week ending October 26 (previously 227,000); Continued claims, week ending October 19 (1.897 million previously); Labor cost index, third quarter (0.9% expected, 0.9% earlier); Job cuts at Challenger, year-on-year, October (+52.4% previously); Personal income, September (+0.4% expected, +0.2% earlier); Personal spending, September (+0.4% expected, +0.2% prior); MNI Chicago PMI, October (46.6 earlier)

Income: Apple (AAPL), Amazon (AMZN), Conoco Phillips (COP), Estee Lauder (EL), Kellanova (K), Intel (INTC), Mastercard (MA), Norwegian Cruise Lines (NCL), Peloton (PTON), Merck (MRK), SiriusXM (SIRI)

Friday

Economic calendar: Nonfarm Payrolls, October (+125,000 expected, +254,000 prior); Unemployment rate, October (4.1% expected, 4.1% earlier); Average hourly wage, month-on-month, October (+0.3% expected, +0.4% prior); Average hourly wage, year-over-year, October (+4% expected, +4% prior); Average hours worked per week, October (34.2 expected, 34.2 previously); Labor participation rate (previously 62.7%); S&P Global US Manufacturing PMI, October final (47.8 prior); ISM production, October (47.6 expected, 47.2 prior); ISM prices paid, October (48.3 earlier)

Income: Charter Communications (CHTR), Dominion Energy (D), fuboTV (FUBO), Chevron (CVX), Exxon Mobil (XOM), Wayfair (W)

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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