Key facts
- Major US banks including JPMorgan, Goldman Sachs, Citigroup, Wells Fargo, Morgan Stanley, and Bank of America are scheduled to report earnings next week.
- The S&P 500's year-to-date gain has reached over 13%.
- The September consumer price index (CPI) report is expected to show a 3.6% annual rise, with the core measure up 2.5%.
- The Federal Reserve aims for a 2% annual inflation rate.
- The benchmark 10-year Treasury yield was last around 5.23%.
US stock markets are bracing for a significant week driven by a slate of major bank earnings reports and crucial inflation data. The S&P 500 recently achieved an all-time closing high, underscoring the market's upward momentum, which has seen a year-to-date gain of over 13%.
Key economic releases include the consumer price index (CPI) report on Wednesday, a closely watched gauge of inflation that will inform the Federal Reserve's upcoming interest rate decision. The Fed, which last month raised rates for the first time since 2023 to combat inflation, is set to meet at the end of October.
Major financial institutions, including JPMorgan, Goldman Sachs, Citigroup, and Wells Fargo, are set to release their third-quarter results on Tuesday, followed by Morgan Stanley and Bank of America on Wednesday. These reports are expected to kick off an earnings season anticipated to show robust profit growth, with S&P 500 earnings projected to have increased by over 30% in the third quarter, according to LSEG IBES.
Analysts are keen to gauge the impact of higher interest rates on consumer spending and capital markets activity. Bank stocks have recently underperformed, with the S&P 500 banks index down 9% in the past month, leading to questions about underlying financial company health. Investors will be looking for positive results to alleviate concerns.
Beyond the financial sector, healthcare giants Johnson & Johnson and UnitedHealth Group, along with asset manager BlackRock, are also due to report. The upcoming CPI data is forecast to show a 3.6% annual increase, with the core measure excluding volatile food and energy prices expected to rise by 2.5%. Concerns remain about persistent services inflation, which could influence the Fed's policy stance. Producer price and retail sales reports will further illuminate the economic landscape. Traders have scaled back expectations for another Fed rate hike, but stronger-than-expected economic data could reignite such bets, potentially pressuring equity markets.