Slowing inflation data and a rising market in the US will test the stock market, which is approaching record levels. The balance sheets announced by major companies like Tesla and Netflix will be a new test for volatile Wall Street.
US stock markets will focus on both major company earnings reports and delayed inflation data next week.
Markets are bracing for a cautious start due to recent heightened volatility and a resurgence in trade tensions between the US and China. According to news on Reuters, electric car manufacturer Tesla and streaming platform Netflix will announce their third-quarter balance sheets this week. These reports will give important signals about the overall profitability of US companies. While these developments are taking place, even though the S&P 500 has risen more than 13% since the beginning of the year and is close to a record, it has remained on a volatile trend in recent days. According to experts, this shows that although the market appears strong on the outside, there are still some weaknesses inside. “The market is becoming more volatile. Valuations are high so we are in a period of increased risk,” said Michael Reynolds, Vice President of Investment Strategy at Glenende.
“THE MOST IMPORTANT ISSUE OF NEXT WEEK” The recent decline was also fueled by a US threat to increase customs duties over China's restrictions on rare earth element exports. Doug Beath of Wells Fargo Investment Institute said US-China relations will be “the most important issue next week”. In terms of technical analysis, there are also signs of weakness. Adam Turnquist, chief strategist at LPL Financial, reported that the percentage of stocks in an uptrend has dropped from 77% to 57% since July. “The indexes are growing thanks to some big tech stocks. This poses a risk of a permanent upside,” said Charles Schwab strategist Kevin Gordon. After strong balance sheets in the banking sector, all eyes are now on the reports of other giants. Procter & Gamble, Coca-Cola, RTX and IBM are among the key companies that will announce their results this week. Due to the US government shutdown, economic data has not been released in recent weeks. Therefore, the company's balance sheet and managers' reports will give an idea of the general situation of the economy. September consumer price index (CPI) data, which will be released with a delay on Friday, will also be decisive in market movements. Inflation data is of particular importance ahead of the US Federal Reserve's (Fed) interest rate decision on October 28-29. It is estimated that the Fed, which cut interest rates for the first time this year last month, could cut interest rates by a quarter of a point at its October meeting if inflation remains low. “Inflation would have to accelerate unexpectedly for the Fed not to take a step in this direction,” Reynolds said.
