What to know this week

Stocks secured their sixth straight week of wins on Friday as strong earnings from Netflix (NFLX) boosted the overall tech sector. The attention now turns to other Magnificent Seven names, with EV maker Tesla (TSLA) set to report quarterly results on Wednesday.

The Dow Jones Industrial Average (^DJI) led markets higher, up about 1% over the past week. The benchmark S&P 500 (^GSPC) and tech-heavy Nasdaq Composite (^IXIC) followed, each securing weekly gains of around 0.9% and 0.8% respectively.

Both the Dow Jones and S&P 500 reached all-time highs throughout the course of the week as well.

Meanwhile, the rotation out of megacap tech and into other areas of the market was on display this week as Utilities (XLU) ripped higher to end the five-day period up 3.4%, followed by Real Estate (XLRE) and Financials (XLF) with gains of 3% and 2.4%, respectively. Small caps also outpaced the major indexes, with the Russell 2000 (^RUT) finishing the week up around 2%.

The market moves come as investors have enjoyed a particularly strong start to earnings season, with Big Tech giants like Apple (AAPL) and Amazon (AMZN) still yet to report.

So far, 79% of S&P 500 companies have delivered a positive earnings surprise for Q3, which is above the overall five-year average of 77%, according to FactSet senior earnings analyst John Butters.

The earnings season party will continue this week, with reports from Tesla, Boeing (BA), General Motors (GM), American Airlines (AAL), and UPS (UPS) among names set to highlight a busy calendar.

Outside of earnings, investors will also be monitoring a slew of economic data, including the final reading of consumer sentiment from the University of Michigan due Friday. The Fed Beige Book, slated for Wednesday, will provide another pulse check on current economic conditions across the 12 Federal Reserve districts.

The housing market will also be top of mind after mortgage rates increased for the third consecutive week, with the 30-year fixed rate inching closer to 6.5%.

A weekly update on jobless claims is also on the schedule, as well as activity checks from the services and manufacturing sectors.

Can Tesla drive strong earnings growth?

Tesla is set to deliver quarterly earnings on Wednesday following the much-anticipated “We, Robot” event that took place on Oct. 10.

Wall Street analysts polled by Bloomberg expect the EV giant to deliver adjusted earnings per share of $0.60 on revenue of $25.42 billion. Global deliveries, which improved sequentially for the first time this year, along with a potential tick-up in automative gross margins, should help boost profits in the quarter.

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However, investors remain on edge when it comes to the company’s future investments after last week’s robotaxi unveiling fell short of expectations.

In a note to clients following the event, Jefferies analysts called the $30,000 driverless robotaxi, dubbed the Cybercab, a “toothless taxi,” adding that Tesla has “ambitious targets” with “little evidence of feasibility.”

The new Cybercab, designed to be fully autonomous, has no steering wheel or pedals. Production is slated to begin “before 2027,” according to CEO Elon Musk, and will likely be a big talking point on the earnings call.

“Investors may seek details on the rollout of Tesla’s sub-$30,000 vehicle,” Bloomberg Intelligence analyst Steve Man wrote on Friday. “For high-volume sales, the automaker might need to include traditional features like a steering wheel and pedals in its Cybercabs.”

Tesla shares, which have seen volatile swings over the past few months, are down about 10% since the start of the year.

Consumer, labor checks

Retail sales for the month of September came in marginally above consensus expectations earlier last week, signaling that the US economy remains strong. But investors will have more data points to chew on, with the final reading of the University of Michigan’s consumer sentiment index due Friday.

For the final reading of October, sentiment is expected to tick up to 69.5 after the index’s preliminary reading unexpectedly fell for the first time in three months to 68.9 in September.

According to the University of Michigan, consumers have continued to express frustration over high prices despite moderating inflation data. This had offset more optimistic views of the jobs market, which remains a critical focus point for the Federal Reserve after it slashed interest rates by 50 basis points at its last meeting.

Markets are currently pricing in another 25 basis point cut in November, but Fed officials seem split on the path forward.

Earlier this week, San Francisco Federal Reserve president Mary Daly said one or two more rate cuts this year would still be a “reasonable thing to do” if inflation pressures continue to cool and the job market remains on solid footing.

“The work to achieve a soft landing is not fully done,” Daly said in her speech on Tuesday. “We are resolute to finish that job.”

But just one day prior, Federal Reserve governor Chris Waller said the central bank needs to be more cautious when it comes to rates, saying in a speech at Stanford University, “Data is signaling that the economy may not be slowing as much as desired.”

Another round of jobless claims, due Thursday, will be closely scrutinized after the number of people filing for unemployment benefits fell back to earth in the week ending Oct. 12.

US jobless claims fell by 19,000 to 241,000, but economists have warned the labor market could be skewed in the near term following the aftermath of both Hurricane Helene and Hurricane Milton in the Southeast regions, along with the labor strike at Boeing.

“Hurricanes Helene and Milton and the Boeing strike are starting to distort the economic data, but given the timing of those storms — with Helene making landfall September 26 and Milton on October 10 — the most significant impact on the data is still ahead of us,” Oxford Economics wrote in a note on Friday.

Weekly calendar

Monday:

Economic data: Leading Economic Index, September (-0.3% expected, -0.2% prior)

Earnings: SAP SE (SAP), Nucor Corporation (NUE), HBT Financial (HBT), Zions Bancorporation (ZION), Nucor Corporation

Tuesday:

Economic data: Philadelphia Fed Non-Manufacturing Index, October (-6.1 prior); Richmond Fed Manufacturing Index, October (-21 prior); Richmond Fed Business Conditions (-3 prior)

Earnings: General Motors (GM), 3M Company (MMM), RTX Corporation (RTX), Verizon Communications (VZ), GE Aerospace (GE), Lockheed Martin (LMT), Quest Diagnostics (DGX), Philip Morris (PM), Denny’s Corporation (DENN), Sherwin-Williams (SHW), Interpublic Group of Companies (IPG), Norfolk Southern Corporation (NSC), RTX Corporation (RTX), Texas Instruments (TXN), PulteGroup (PHM), Enphase Energy (ENPH)

Wednesday

Economic data: MBA Mortgage Applications, week ending Oct. 18 (-17.0% prior); Existing Home Sales, Sept. (3.88 million expected, 3.86 million prior); Federal Reserve Beige Book

Earnings: Tesla (TSLA), Boeing (BA), AT&T (T), IBM (IBM), Coca-Cola (KO), GE Verona (GEV), T-Mobile (TMUS), Las Vegas Sands (LVS), Hilton Worldwide Holdings (HLT), Whirlpool Corporation (WHR), Mattel (MAT), CME Group (CME), General Dynamics (GD), ServiceNow (NOW), Viking Therapeutics (VKTX)

Thursday

Economic data: Initial Jobless Claims, week ending Oct. 19 (240,000 expected, 241,000 prior); Continuing Claims, week ending Oct. 12 (1.87 million prior); S&P Global US Manufacturing PMI, October preliminary (47.5 expected, 47.3 prior); S&P Global US Services PMI, October preliminary (55.2 expected, 55.2 prior); New Home Sales, September (720,000 expected, 716,000 prior); Kansas City Fed Manufacturing Activity, October (-8 prior); Chicago Fed National Activity Index, September (0.12 prior)

Earnings: UPS (UPS), American Airlines (AAL), Southwest (LUV), Dexcom (DXCM), Deckers Outdoor Corporation (DECK), Sketchers (SKX), Coursera (COUR), Dow Inc. (DOW), Honeywell International (HON), Union Pacific Corporation (UNP), Hasbro (HAS), Northrop Grumman Corporation (NOC), Capital One (COF), Beyond, Inc. (BYON)

Friday

Economic data: Durable Goods Orders, September preliminary (-1.0% expected, 0.0% prior); Durables Ex-Transportation, September preliminary (-0.1% expected, 0.5% prior); University of Michigan Consumer Sentiment, October final (69.5 expected, 68.9 prior); Kansas City Fed Services Activity, October (-2 prior)

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