Key facts
- The Nasdaq Composite closed lower on Monday.
- Oil futures rallied after strikes on Riyadh's international airport.
- Major US banks including Goldman Sachs, Citigroup and JPMorgan Chase will report earnings on Tuesday.
- S&P 500 earnings are expected to surge 30.6% in the third quarter.
- US inflation data for September is due this week.
- Cleveland Federal Reserve President Beth Hammack stated the Fed should move quickly to a more restrictive monetary policy.
The Nasdaq Composite index closed lower on Monday as oil prices surged by nearly $2 a barrel following attacks on a Saudi airport. Investors are also anticipating the commencement of the third-quarter earnings season, with major US banks like Goldman Sachs, Citigroup, and JPMorgan Chase scheduled to report on Tuesday.
Oil futures rallied after the strikes on Riyadh's international airport, overshadowing potential increases in supply. Analysts are expecting S&P 500 earnings to rise by 30.6% in the third quarter, according to LSEG IBES data. This week will also see the release of September readings for US consumer and producer inflation, as well as retail sales data.
Market participants have been cautious due to the recent advance in bond yields to 24-year highs, with elevated energy prices fueling inflation concerns. Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, noted the significance of upcoming economic reports and earnings, particularly from the large banks. Robert Pavlik, senior portfolio manager at Dakota Wealth, described the market sentiment as careful, with many factors to consider.
In sector performance, energy stocks outperformed the S&P 500's major industry sectors. The S&P 500 communication services index also saw gains, boosted by Meta. Technology and consumer discretionary sectors lagged, with semiconductor stocks hitting a three-week low. Microsoft shares rose 0.9%, and Salesforce shares increased after a 'buy' upgrade from BofA Global Research.
Cleveland Federal Reserve President Beth Hammack indicated that the US central bank should move relatively quickly towards a more restrictive monetary policy to combat inflation, which she believes has become more widespread and is influencing pricing strategies.