As dawn broke on Monday, the futures of Dow Jones, S&P 500, and Nasdaq whispered a modest rise, hinting at cautious optimism in the wake of unsettling global events. Meanwhile, crude oil witnessed a steep drop following Israel’s meticulous airstrikes targeting Iran, instantly sending ripples through the economic waters as the yen buckled after Japan’s elections.
This week promises to be pivotal for technology, as heavyweights such as Apple, Microsoft, Alphabet (Google’s parent company), Amazon.com, and Meta Platforms prepare to unveil their quarterly performances. The outcomes of these reports could engineer seismic shifts in both the tech sector and the broader market landscape.
On the economic horizon, the October jobs report looms large, alongside the consequential Election Day and the subsequent Federal Reserve meeting.
Boeing, grappling with the ramifications of an exhausting strike, has announced a significant share sale—90 million shares at roughly $14 apiece, alongside $5 billion in depositary shares. This follows a recent filing to offload up to $25 billion in a combination of shares and debts, leading to a slight dip in their stock early Monday.
In the previous week, the stock market’s demeanor was decidedly mixed; despite this, the Nasdaq shattered records—a brilliant highlight against a backdrop of weak overall breadth. Tesla, Nvidia, and the newly public AI chipmaker Astera Labs emerged as notable contenders, flashing buy signals.
Moving forward, Dow futures incrementally rose by 0.2%. The S&P 500 futures surged by 0.4%, while Nasdaq 100 futures advanced by 0.5%, albeit pulling back from their early morning peaks. The 10-year Treasury yield nudged upwards to 4.26%, amid an unexpected 6% dive in crude oil futures, fueled by hopes for muted escalations in Middle East conflict. This, despite precise strikes from Israel targeting military infrastructures in Iran—a move intentionally calibrated to sidestep oil and nuclear facilities.
The outcome of Japan’s recent elections saw the ruling Liberal Democratic Party and its coalition partner losing their majority in the lower parliamentary house. Nevertheless, prospects are ripe for a reconfiguration of alliances, suggesting a potential broader coalition on the horizon. The Nikkei, buoyed by this news, leapt up by 1.8%, while the yen softened against the dollar—a combination seen as favorable for global markets.
It’s prudent to remember that overnight movements in futures do not always forecast actual trading behaviors in subsequent stock market sessions.
The stock market’s vibrancy exhibited a patchy semblance of health over last week, with Tesla, Nvidia, and other mega-cap stocks masking an underlying weakness. Specifically, the Dow Jones Industrial Average fell by 2.7%, while the S&P 500 sagged nearly 1%. Conversely, the Nasdaq Composite inched up by 0.2%, whereas the smaller Russell 2000 shed 3%.
Key observations reveal that the Dow and Russell are now trailing below their 21-day lines, with the Russell just beneath its 10-week line. Meanwhile, the S&P 500 has managed to stay above its 21-day threshold, inching closer to historic highs. The Nasdaq reached an all-time peak last Friday, yet pulled back slightly from its intraday zenith.
The landscape is also shifting for various other stocks, as several names broke through critical buy points on Friday: Western Digital, ResMed, Deckers Outdoor, and L3Harris Technology each registered notable earnings that fueled their respective performances.
The 10-year Treasury yield has spiked by 16 basis points, settling at 4.23%. Investors can expect a barrage of economic indicators this week, including the initial read on Q3 GDP and the highly anticipated October jobs report—data that will culminate in the Fed’s next meeting slated for Nov. 6-7. Over the past week, U.S. crude oil futures surged by 4.5%, now perched at approximately $71.78 per barrel.
Upcoming Earnings from Tech Giants
As the week unfolds, prepare for a cavalcade of tech earnings: Google is on deck for Tuesday evening; Microsoft and Meta will follow on Wednesday, with Apple and Amazon closing the show on Thursday night. These titans are not just near crucial buy points; they are flirting on the precipice of market significance, making their impending reports fraught with risk.
Together, these five colossal companies command a staggering market valuation exceeding $12 trillion, thereby ensuring their stock reactions will profoundly influence the broader indices. Moreover, the remarks from Microsoft, Google, Amazon, and Meta regarding artificial intelligence monetization and capital investments will carry weighty implications for the entire AI sector. The investors will be keenly attuned to Apple’s results, which carry critical insights for iPhone chipmakers and ancillary suppliers.
The ripple effects of these reports will resonate through the likes of Nvidia, Broadcom, Taiwan Semiconductor Manufacturing, Arista Networks, Qualcomm, and others—goliaths that together exceed a monumental $5 trillion in market cap.
Tesla & Nvidia Surge
Tesla stock marked a staggering 22% increase last week, trading at 269.19 as it breached a significant buy point at 264.86 from a cup-with-handle pattern—a 13-month closing peak, albeit stretched 16.8% above its 50-day line. This surge was bolstered by unexpectedly robust earnings and buoyant predictions from Elon Musk signaling higher deliveries through 2025.
Meanwhile, rival BYD saw its stock rise slightly by 2% to 37.60, inching within safe buy territory in anticipation of its Q3 earnings report due on Oct. 30 and upcoming sales figures from October.
In the wake of Tesla’s renaissance, Wall Street is buzzing with excitement. BofA Securities’ analyst Vivek Arya underscored Nvidia and other chip stocks last week, heralding a “generational capex cycle in generative AI infrastructure.” Nvidia’s stock leapt by 2.6%, clearing a buy point and achieving record highs. Shares now stand at 13.8% above the 50-day line. Concurrently, Astera Labs, another fresh face in the AI chip arena, climbed 8.7%, surpassing its established buy point.
What Lies Ahead?
Despite a week of haphazard movements, growth stocks displayed resilience. Investors had ample opportunity, though caution prevailed; many opted to trim their positions or retreat from underperformers ahead of the earnings frenzy that lies ahead. Each upcoming earnings release, particularly those from industry giants like Apple, Meta, Microsoft, Amazon, and Google, could radically sway the market towards significant gains—or dramatic losses. Simultaneously, pivotal economic reports loom ominously on the horizon, with Election Day and a Fed meeting fast approaching.
As demonstrated by the volatility of the Israeli-Iran conflict, the unforeseen nature of geopolitical events can similarly disrupt market dynamics. Thus, a solid game plan is crucial. Continually refreshing your watchlist will aid in identifying promising setups and monitoring sector trends.
For regular insights on stock market trajectories and leading stocks, be sure to delve into “The Big Picture” daily.
