The Dow Jones is on track for its best October in 6 years and third quarter earnings have been strong so far. What could possibly go wrong?
A traditionally tough month has turned out to be anything but for the stock market… so far. Who would have thought, based on how things ended last month and the start of the first full week of October, that investors would rather be sitting now. Certainly not Dennis Gartman.
Yet here we are. Look at us, as actor Paul Rudd would say.
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Indeed, the Dow Jones Industrial Average DJIA,
is on track for its best month since March, when it rose 6.62%, according to FactSet data.
The rally, in what is typically one of the weakest months of the year, put blue chips within 1% of its August 16 close at 35,625.40. And our colleagues at Dow Jones Market Data said the index’s performance so far represents the best start to October since 2015.
The S&P 500 SPX,
is down 1.45% from its all-time high of 4,536.95 and the Nasdaq Composite COMP,
is 3.1% off its Sept. 7 record at 15,374.33.
This is just the start, with only 8% of companies in the S&P 500 having released third quarter results so far, but at least 80% of companies are beating earnings and revenue expectations , according to John Butters, senior earnings analyst for FactSet.
Butters says the blended growth rate (estimate and actual results) of the S&P 500 reporting companies is 30%, which, if held up, would represent the rate of growth in earnings over more than a decade.
On top of that, the blended net profit margin of 12.3% would mark the third highest recorded by FactSet since it started tracking this metric in 2008. On June 30, the estimated net profit margin for the third quarter was by 12%.
It certainly didn’t hurt this JPMorgan Chase JPM,
SG Goldman Sachs,
Bank of America BAC,
Wells Fargo WFC,
and Morgan Stanley MS,
some of the country’s biggest banks have beaten earnings estimates, Butters said.
Admittedly, it’s not as if a clear signal has sounded for the bulls, with investors still harboring turmoil centered around spiking inflation, stagflation, China’s Evergrande-fueled real estate saga and an ongoing energy crisis, among other concerns.
However, the upward drift in US stocks has challenged the gravitational pull of these bearish factors. Maybe the bulls can thank investor and market tipster Dennis Gartman, who after a particularly bad day in October declared the bull market dead.
This prediction may still hold true, but market analyst and founder of NorthmanTrader.com Sven Henrich was not going to miss the opportunity to criticize Gartman.
See: MarketWatch and Barron’s are also bringing together the most influential figures in crypto to help identify upcoming opportunities and risks in digital assets on October 27 and November 3. Register today.
However, the market is far from off the hook. The Federal Reserve appears poised to start cutting back on its monthly purchases of treasury bills and mortgage-backed securities.
And Vivien Lou Chen of MarketWatch wrote that the stronger-than-expected US inflation data for September is prompting bond investors to consider the risk that the Federal Reserve will be forced to tighten interest rates in a stagnant economy with hikes of ever higher prices.
Fed Chairman Jerome Powell is expected to deliver a speech at the end of the coming week that will mark the final comments from policymakers ahead of the central bank policy meeting on November 2-3, when it is possible to begin reduce its bond purchases. could be started.
Another 10 Year T-Bill Rise Will Return TMUBMUSD10Y,
to achieve new gains on growth or technology stocks? Will the US Dollar Rise to New Highs? Will the bad orientations of companies and the constant decline in profit margins end up darkening the mood on Wall Street? Even Gartman doesn’t know.
But for now, bulls are on the rise in October.
What lies ahead in US economic data this week?
Industrial production and capacity utilization data for September at 9:15 a.m. ET
National Association of Home Builders Index or October at 10 a.m.
Building permits and starts for September at 8:30 a.m.
Fed Beige Book at 2 p.m.
First jobless claims at 8:30 a.m.
Philadelphia Fed Manufacturing Index for October at 8:30 a.m.
Sales of existing homes for September at 10 a.m.
Leading economic indicators expected at 10 a.m.
A flash read of IHS Markit’s manufacturing and services PMIs at 9.45am
Income reports to watch this week
Johnson & Johnson JNJ,
Procter & Gamble Co PG,
Verizon Communications VZ,
Tesla Inc. TSLA,
Baker Hughes Co. BKR,
Biogen Inc. BIIB,
United Airlines Holdings UAL,
Las Vegas Sands Corp. LVS,
Intel Corp. INTC,
American Airlines Group Inc. AAL,
Southwest Airlines Co. LUV,
Chipotle Mexican Grill Inc. CMG,
Tractor Supply Co. TSCO,
American Express Co. AXP,
Honeywell International Inc. HON,
Whirlpool Corp. WHR,
Seagate Technology Holdings STX,