Stocks Down Last Week, Earnings Season Ramps Up This Week

Market Moves You Need to See Stocks Down Last Week, Earnings Season Ramps Up This Week [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks Down Last Week, Earnings Season Ramps Up This Week [Stocks Down Last Week, Earnings Season Ramps Up This Week]Image: Bigstock Stocks closed sharply lower on Friday, and for the week. Bond yields on the other hand closed sharply higher. And that's been the prevailing dynamic over the last 2 months. The good news is that rising yields, especially on the long bond, have tightened financial conditions significantly in recent months, and Fed Chair Jerome Powell, along with several of his colleagues at the Fed, have signaled that may preclude the Fed from having to tighten any further. We'll find out in a week and a half when the Fed makes their announcement on rates on Wednesday, November 1. In the meantime, we'll get another piece of inflation data this week on Friday, October 27, when the Personal Consumption Expenditures (PCE) index is released. That's the Fed's preferred inflation gauge. So all eyes will be on Friday's report. But there's a full week of economic reports this week. In addition we'll have a busy week of earnings reports with 984 companies on deck. That includes marquee names like Microsoft, Alphabet (aka Google), and Visa on Tuesday; Meta (aka Facebook), IBM, and Boeing on Wednesday; Amazon, Intel, and UPS on Thursday; and Exxon Mobile and AbbVie on Friday. The ongoing wars between Ukraine and Russia, and more recently between Israel vs. Hamas, and what the U.S. involvement will be (especially in the latter conflict), has been a growing source of unease in the market. But so far, aside from concerns over energy prices and possible supply chain disruptions, it has not had any impact on business earnings or the larger economy. For now, the main focus for the market appears to be on rates. And hopefully more so on earnings in the coming weeks. If the Fed holds rates steady next week, and possibly even provides indication that they will do the same in December, which would imply their rate hike cycle could be at an end, that will go a long way with tempering rising yields. Additionally, this earnings season is off to an excellent start, even though it's been largely ignored so far. But as earnings season kicks into gear, if the current outperformance continues, more and more focus will likely be put on that, and should have a positive impact on stocks. In spite of the pullback we've seen over the last couple of months, it's important to keep the proper perspective. 1) The pullback in the S&P is down -7.95%, while the Nasdaq is down -9.57%. But pullbacks and corrections are common. (Pullbacks (-5% to -9.99%) in bull markets happen on average of 3-4 times a year, while corrections (-10% to -19.99%), typically happen once a year.) Even though they never feel routine when they're taking place, they very much are. 2) The S&P is up 10.2% this year, while the Nasdaq is up 24.1%. 3) The statistical trends favor the bulls, which shows if the market is up more than 10% thru July (which it was), and August is down (which it was), the remainder of the year is up 100% of the time with an average gain of 9.9% (median of 8.7%). 4) And there's ample reason to be bullish on the market, not the least of which includes inflation on the decline, the Fed nearing the end of their rate hike cycle, personal incomes hovering near all-time highs, and the economy continuing to grow amidst a robust jobs market. This favors a Q4 rally. And given the above, we could very well see an even bigger one than expected. See you tomorrow, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research [Screen Time Reimagined]( Mode Mobile's "EarnPhone" pays users for using apps, web browsing, listening to music, and even charging their phones. Already featured in Best Buy, Amazon, and Walmart, the company plans to expand internationally to meet growing demand worldwide. With 40M+ users and $50M+ in cumulative revenue through 2022, Mode is just getting started. And investors who act now can claim 100% bonus shares before the company's IPO. [Click here to grab your 100% bonus shares now]( Most Popular Articles from Zacks.com [Big Tech Earnings: Time to Buy Microsoft, Amazon, and Meta Stock?]( Stock Strategist Benjamin Rains take a deep dive into the technology superstars heading into their upcoming earnings releases. [Read More »]( [FedEx vs. UPS: What's the Better Buy?]( With UPS reporting this Thursday, investors should expect FedEx's earlier outperformance as a guide. 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