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What you need to know this week

A turbulent five days for markets, with rising tensions in the Middle East and a port strike that both started and stopped, ended with a better-than-expected jobs report in September, leaving stocks closing marginally this week.

In the first week of October, the S&P 500 (^GSPC) rose 0.2%, while the Nasdaq Composite (^IXIC) and the Dow Jones Industrial Average (^DJI) rose about 0.1%.

An update on inflation and the start of third-quarter earnings reports will grab investors’ attention in the coming week.

The October Consumer Price Index (CPI) report will be the main economic calendar, which will also include updates on consumer confidence and the release of the minutes of the September Federal Reserve meeting.

On the corporate side, some of America’s largest financial institutions, including JPMorgan (JPM), Wells Fargo (WFC) and BlackRock (BLK), will kick off third-quarter earnings season on Friday. PepsiCo (PEP) and Delta Air Lines (DAL) will also report earlier this week.

On Friday, the September jobs report allayed concerns that the labor market is deteriorating rapidly and will lead to another massive rate cut.

Bureau of Labor Statistics data released Friday showed the labor market added 254,000 payroll jobs in September, more than the 150,000 economists expect. Revisions to both the July and August reports show that the U.S. economy created 72,000 more jobs in those two months than previously reported.

Meanwhile, the unemployment rate fell to 4.1% from 4.2% in August.

Economists and Wall Street strategists argued that this likely takes another half-percentage point Fed rate cut in November off the table.

“We think the rate decline should continue, but with today’s strong data it is more likely that the Fed will continue with incremental cuts of 25 basis points (bps),” BlackRock Chief Investment Officer of Global Fixed Income Rick Rieder wrote in a note research note on Friday. ‘For a Fed that is recalibrating to an economy that is operating at a very solid level, it seems more appropriate for the market to price in a small chance of a “no rate cut” at the next meeting than a small chance of a 50% interest rate reduction. -bps reduced.”

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While concerns about the maximum employment portion of the Fed’s dual mandate appear to have subsided for now, inflation remains above the central bank’s 2% target.

The coming week will bring another update on how quickly price gains are falling toward that target.

Wall Street economists expect headline inflation to have risen just 2.3% annually in September, a slowdown from August’s 2.5% increase. The August figures marked the slowest annual inflation since early 2021. Prices are expected to rise 0.1% month-on-month, down from 0.2% in May.

On a core basis, which excludes food and energy prices, the CPI is expected to have risen 3.2% in September compared to last year, unchanged from August. Monthly core price increases are expected to reach 0.2%, down from August’s 0.3%.

“Inflation continues to move in the right direction, which will allow for further cuts,” Bank of America economist Stephen Juneau wrote in a research note previewing the release. “However, we continue to think that employment data is more important for the size of the cuts.”

Tesla will once again be one of the top individual stocks of interest in the coming week. The electric vehicle manufacturer is expected to host its highly anticipated robotaxi event on October 10.

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Tesla is expected to provide further details about its plans for its fully self-driving project. Morgan Stanley analyst Adam Jonas wrote in a note to clients that he expects visitors to get a tour and a ride in one of Tesla’s “cyber taxis.”

As Yahoo Finance’s Laura Bratton reported, RBC analyst Tom Narayan told Yahoo Finance that while he has high hopes for a future of self-driving robotaxis, the event is unlikely to send Tesla’s stock soaring.

“I think it’s hard to get excited about a stock at such a high level,” he said, noting that the launch will showcase Tesla’s big vision for AI and autonomous vehicles — a vision that he said is likely to take some will take years before this becomes reality. “makes financial sense” for the EV maker.

Shares of Tesla fell about 5% last week ahead of the event, when the company announced third-quarter deliveries that fell short of Wall Street estimates.

Major banks are about to kick off what Wall Street expects to be a subdued quarter in terms of year-over-year earnings growth. Going into the reporting period, the consensus expects earnings to grow by 4.7%. This would be the fifth consecutive quarter of growth compared to the same period a year earlier, but it would also be the slowest annual growth since the fourth quarter of 2023.

“The bottom-up consensus predicts a sharp and broad slowdown,” Binky Chadha, Deutsche Bank’s chief equity strategist, wrote in a note to clients.

Chadha added that this should lead to corporate profits exceeding Wall Street expectations, as often happens. However, it doesn’t make Chadha more optimistic about how stocks could perform during the reporting period.

“Earnings seasons are generally positive for equities, but the strong rally and above-average positioning argue for a muted market reaction,” Chadha wrote. “This earnings season will also play out against a backdrop that could be overshadowed by geopolitical developments and noise surrounding the US elections.”

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Bank of America U.S. and Canadian equity strategist Ohsung Kwon told Yahoo Finance that with the consensus not expecting a strong third quarter, the focus will be on what companies say about the way forward.

“Now that the easing cycle has begun, what will companies say about any early signs of improvement given the lower interest rate environment?” Kwon said.

Economic data: No notable releases.

Income: Duckhorn (NAPA)

Economic data:

Income: PepsiCo (PEP)

Economic data: MBA mortgage applications October 4 (-1.3% earlier), wholesale inventories month-over-month, August final (0.2% earlier); Minutes of the September FOMC meeting

Income: Helen of Troy (HELE)

Economic data: Consumer Price Index, month-on-month, September (+0.1% expected, +0.2% earlier); CPI excluding food and energy, month-on-month, September (+0.2% expected, +0.3% earlier); Consumer Price Index, year-on-year, September (+2.3% expected, +2.5% prior); CPI excluding food and energy, year-on-year, September (+3.2% expected, +3.2% prior); Real average hourly wage, year-on-year, September (+1.4% previously); Real average weekly earnings, year-on-year, September (+0.9% previously); Initial unemployment claims, week ending October 5 (237,000 expected, 225,000 earlier)

Income: Delta Air Lines (DAL), Domino’s (DPZ), Tilray (TLRY)

Economic data: Producer Price Index, month-on-month, September (+0.1% expected, +0.2% earlier); PPI, year-on-year, September (+1.6% expected, 1.7% prior); Core PPI, month-on-month, September (+0.2% expected, 0.3% prior); Core PPI, year-on-year, September (+2.7% expected, +2.4% prior); Consumer confidence from the University of Michigan, provisional October (70.3 expected, 70.1 earlier)

Income: BlackRock (BLK), BNY Mellon (BK), JPMorgan (JPM), Wells Fargo (WFC)

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

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