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Stock Market Wrap-Up: October 21, 2024 – A Day of Anticipation and Mild Retreats
As the stock market closed on October 21, 2024, investors were left with a mix of emotions – anticipation for the upcoming earnings season and a hint of caution reflected in the day's trading activity. Here’s a detailed breakdown of what transpired.
Market Indices: A Day of Slight Declines
The major indices experienced a mild downturn, marking a pause in the recent record-setting rally. The S&P 500 index ($^GSPC$) fell by nearly 0.3%, retreating from its recent all-time closing peak. This slight dip came after the index had enjoyed its sixth consecutive weekly gain.
The Dow Jones Industrial Average ($^DJI$) dipped almost 0.7%, while the tech-heavy Nasdaq Composite ($^IXIC$) remained close to unchanged. This stability in the Nasdaq was noteworthy, given the significant influence of tech stocks on the market's overall performance.
Earnings Season: The Main Event
The primary focus for investors today was the impending earnings season, which promises to be a pivotal week for the market. Over 100 S&P 500 companies are set to disclose their third-quarter earnings, and the market is bracing for the impact. So far, 80% of the third-quarter earnings reported by S&P 500 companies have surpassed expectations, setting a high bar for the rest.
Key Earnings to Watch
Several high-profile companies are scheduled to report their earnings this week, and investors are particularly keen on Tesla's ($TSLA$) earnings release on Wednesday. Tesla's recent robotaxi reveal, which did not meet expectations, has added to the anticipation and uncertainty surrounding its earnings report. Despite this, Tesla remains a significant player in the tech sector, and its performance will be closely watched.
Other notable companies reporting earnings this week include General Motors, Coca-Cola ($KO$), Airlines, and UPS. Each of these reports has the potential to significantly influence their respective sectors and the broader market.
Boeing: Earnings and Labor Negotiations
Boeing ($BA$) faces a dual challenge this week. On Wednesday, the company will announce its earnings simultaneously with a vote from workers on a tentative agreement reached with the union to conclude a five-week strike. Boeing's stock showed resilience, increasing by over 3% in early trading on Monday, indicating investor optimism about the potential resolution of the labor dispute.
Nvidia and Apple: Bright Spots
Despite the overall market downturn, some tech giants managed to shine. Nvidia ($NVDA$), a leading player in AI chip manufacturing, briefly reached an intraday record during the trading session. Nvidia's stock rose over 1%, touching an intraday high above $140, which helped offset the broader decline in the Nasdaq Composite.
Apple ($AAPL$) was also on track to achieve another closing high, with its stock hovering around $235.80. Apple's year-to-date performance has been impressive, with the stock surging more than 22%. This consistent strength in Apple's shares underscores the company's robust market position and investor confidence.
Economic Indicators and Interest Rates
The yield on 10-year Treasury bonds increased, contributing to the market's cautious tone. This rise in bond yields often signals that investors are preparing for potential rate hikes or economic changes. Lorie Logan, president of the Dallas Fed, reiterated her view that interest rates should be lowered gradually to manage risks and achieve economic objectives. Logan described the economy as "strong and stable" but acknowledged significant uncertainties.
Netflix: A Strong Start to Earnings Season
Last Friday, Netflix ($NFLX$) set a positive tone for the earnings season with its solid third-quarter 2024 earnings report. Netflix beat both earnings and revenue expectations, reporting earnings of $5.40 per share and revenues of $9.82 billion. The company's ad-supported membership tier saw a 35% jump in the quarter, and it projected an upbeat outlook for the next quarter, expecting revenues to rise 14.7% to $10.13 billion.
Oil Prices and Energy Sector
Oil futures continued their decline on Friday, falling more than 7% for the week due to concerns over demand from China and the escalating war in the Middle East. Brent crude decreased to $73.06 per barrel, and WTI crude fell to $69.22 per barrel. This decline in oil prices had a mixed impact on the market, with the Energy Select Sector SPDR ($XLE$) sliding 0.3% on Friday.
Housing Market Data
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported that building permits for September totaled 1,428,000, a 2.9% decrease from the revised August rate. Housing starts for September were at 1,354,000, slightly below the revised August estimate. These numbers indicate a slight cooling in the housing market, which could have broader economic implications.
Market Sentiment and Volatility
The fear-gauge CBOE Volatility Index ($VIX$) decreased 5.7% to 18.03 on Friday, reflecting a relatively calm market despite the upcoming earnings season. The total volume of shares traded on Friday was higher than the last 20-session average, indicating active investor participation.
Conclusion: A Week of High Stakes
As the market closes on October 21, 2024, investors are poised for a week filled with high-stakes earnings reports. The performance of major companies like Tesla, Boeing, and others will significantly influence market sentiment and direction. The interplay between economic indicators, interest rates, and corporate earnings will continue to shape the market's trajectory.
In this complex landscape, it is crucial for investors to remain informed and adaptable. The upcoming week promises to be a critical period for the stock market, and understanding the key drivers and risks will be essential for making informed investment decisions. As we move forward, the balance between earnings expectations, economic data, and market sentiment will dictate the course of the stock market.
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