On Tuesday, S&P exhibited minimal movement as market participants processed a series of earnings reports and paused for reflection after the preceding day’s rally. The Dow Jones Industrial Average increased by 47 points, representing a 0.1% rise. The S&P 500 declined by 0.1%, whereas the Nasdaq Composite experienced a decrease of 0.3%. A trio of traditional economy stocks experienced increases following quarterly results that surpassed expectations. General Motors experienced a significant increase of 12% following an upward revision of its full-year guidance and surpassing market estimates. The Detroit automaker has revised its forecast regarding the impact of President Donald Trump’s tariffs for the year, indicating an expectation to mitigate approximately 35% of that effect. Additionally, Coca-Cola and 3M experienced increases of 3% and over 2%, respectively, following their recent earnings reports, which exceeded expectations.
In the interim, Zions Bancorp experienced a 2% increase following the announcement of third-quarter profits that surpassed those of the previous year, notwithstanding the revelation of certain problematic loans late last week, which triggered a wider market decline. Investors are closely observing an important week ahead for third-quarter earnings, with Netflix scheduled to report after the bell on Tuesday and Tesla expected to follow on Wednesday. The robust commencement of the earnings season thus far seems to bolster the overarching market rally, especially in light of an economic data hiatus prompted by the government shutdown.
Over three-quarters of the S&P 500 companies that have reported results thus far have exceeded expectations. Major tech companies are anticipated to represent a substantial share of profits as the artificial intelligence sector continues to thrive, with the “Magnificent Seven” projected to achieve year-over-year earnings growth of 14.9%, in contrast to 6.7% for the remaining 493 companies in the index. “If the Mag Seven can deliver on elevated profit expectations, markets could experience another upward movement. Market action on Friday and Monday may indicate that investors are starting to bet on Big Tech in anticipation of important profit reports next week,” stated Anthony Saglimbene.
“In light of heightened expectations and valuations, the outcomes from this cohort may impact the overall market trajectory as we approach year-end,” Saglimbene added. “Profit outperformance, combined with stable outlooks and strong AI tailwinds, could be greeted favorably as we move through the earnings season, though some may argue stock prices already reflect these positives.” The market’s optimism is bolstered by expectations of an additional quarter percentage point rate cut during the Federal Reserve’s meeting at the end of October. The consumer price index data scheduled for release on Friday is anticipated to provide insights into the current inflationary landscape, potentially impacting the forthcoming decision of the central bank.