This week (11-15th), the New York Stock Exchange (NYSE) is expected to show high volatility in the announcement of companies’ earnings, the release of CPI and the minutes of the Federal Open Market Committee.
Inflation concerns have grown recently as oil prices have surpassed $80 a barrel and wage growth has risen in the September employment report released late last week.
If supply chain disruptions and inflationary pressure continue, pressure on companies’ performance is also expected to increase.
Starting this week, companies will announce their third-quarter earnings in earnest. Investors are expected to pay attention to supply chain problems and cost problems caused by inflationary pressure in this quarter’s performance.
According to Factset, 47 companies listed on the S&P 500 Index presented negative performance guidance (expected) in the third quarter, while 56 companies released positive guidance.
Starting with JP Morgan Chase on the 13th, banks such as Bank of America, Citigroup, Wells Fargo, US Bankov, and Goldman Sachs on the 15th will announce their earnings one after another. Banks’ stock prices have rebounded rapidly in recent years. This is because expectations have grown that net interest margins will increase due to rising interest rates on government bonds. However, banks’ third-quarter earnings are expected to slow down from the previous quarter. This is because overall indicators deteriorated, with the U.S. GDP growth weakening in the third quarter from the previous quarter due to the spread of delta mutations.
It is also expected to keep an eye on rising oil prices and moves to interest rates on government bonds. In recent years, the rise in energy prices has raised inflationary pressure, which has raised interest rates on government bonds.
On the 8th, the price of West Texas Intermediate (WTI) surpassed $80 a barrel for the first time since November 2014, and the 10-year government bond rate exceeded 1.60% on the same day.
Capital Economics warns that rising energy prices will put additional upward pressure on government bond rates.
The steep rise in government bond rates negatively affects technology stocks. However, as the bond market is closed on Columbus Day on the 11th, interest in interest rates is expected to ease somewhat at the beginning of the week.
However, as the Consumer Price Index (CPI) and Producer Price Index (PPI) were released on the 13th and 14th, respectively, interest in prices is expected to draw attention again. According to the Wall Street Journal, the CPI is expected to rise 0.3% in September from the previous month and 5.4% from the same period last year. This is expected to be similar to or higher than the previous month’s 0.3% rise and 5.3%. The source CPI is also expected to rise 0.3% from the previous month and rise 4.0% from the same period last year, higher or similar compared to the previous month’s 0.1% and 4.0%.
In addition, attention is being paid to whether retail sales, which will be released on the 15th, will meet market expectations. Retail sales are also expected to fall 0.2% in September from the previous month, just as employment was sluggish in September due to the delta mutation. In August, it increased by 0.7%.
The Federal Reserve (Fed) has expected high inflation to be temporary and to naturally ease when supply chain problems are resolved. However, if high inflation hardens, pressure is expected to grow for the Fed to hurry up and tighten next year.
Over the past week, the Dow Jones 30 Industrial Average rose 1.22%, while the Standard & Poor’s 500 Index rose 0.79%. The NASDAQ index rose 0.09% over the same period.