The rocky start to October trading has left Wall Street wondering what can boost stocks in the near-term. The three major averages eked out modest gains after a wobbly week. The Dow Jones Industrial Average and Nasdaq Composite each added 0.1% on the week, while the S & P 500 rose 0.2%. Stocks struggled this week as rising tensions in the Middle East set off the strongest rally in oil prices since March 2023. But equities rallied on Friday following the strong jobs report , erasing the significant losses the three major averages were tracking for heading into the session. October is typically a tough trading month as investors take profits before year-end rallies. But after 2024 saw the strongest performance over the first nine months of a year since 1997 , traders hoped the market could continue defying stereotypes and building on this year’s gains. Now, investors are left wondering what can reignite the market, especially given that overhangs ranging from the upcoming presidential election to geopolitics provide reason for caution. “The stock market has been living up to October’s reputation of increased volatility,” said Glen Smith, chief investment officer at GDS Wealth Management. “We expect this choppiness to continue for the next few weeks as the market starts to navigate the uncertainty surrounding the election, the Federal Reserve’s next move and corporate earnings reports.” Said another way, the market could “trade nowhere” between now and the presidential election, Mike Dickson of Horizon Investments told CNBC Pro. Though he said there could still be an end-of-year rally in November and December once the uncertainty around White House control is in the rearview mirror. Taking a step back, the market appears in solid health. If the year ended on Friday, the S & P 500 would close with a gain of around 20.5%. “Given the fact that the market’s been so strong this year, we are priced a little bit for perfection,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance. Inflation report, Fed minutes on deck In the week ahead, investors will keep an eye on a couple of potential catalysts. On Wednesday, investors will parse minutes from September’s central bank gathering for insights into the future path of monetary policy. However, because the Fed went with the larger-sized decrease to rates, Zaccarelli said there’s less need to understand what went on behind the scenes. The consumer price index comes a day later. It has been considered a key economic release for the past several years as inflation ran rampant. But Horizon Investment’s Dickson said the gauge of price growth now takes a back seat to labor data following the Fed’s last meeting. It’s also lost prominence as the rate of annualized inflation has fallen closer to the central bank’s 2% goal, he noted. “I would say the inflation report is probably less important than it used to be,” Dickson said. “But a surprise in the wrong direction could have some impact to future rate policy.” Producer price index data comes on Friday, offering insight into inflation from a wholesaler perspective. Mortgage and consumer sentiment stats are also among notable releases on the docket. The early innings of earnings season also kicks off next week. PepsiCo posts earnings on Tuesday, followed by Delta on Thursday. JPMorgan Chase and Wells Fargo cap off the week with Friday reports. The week ahead Tuesday 6 a.m.: NFIB Small Business Index (September) 8:30 a.m.: Import/export goods data (August) Before the bell earnings: PepsiCO Wednesday 7 a.m.: Mortgage Applications (week ended Oct. 4) 10 a.m.: Wholesale inventories (August) 2 p.m.: FOMC minutes Thursday 8:30 a.m.: CPI (September) 8:30 a.m.: Initial jobless claims (week ended Oct. 5) 11 a.m.: New York Fed President John Williams speaks Before the bell earnings: Delta, Tilray Friday 8:30 a.m.: PPI (September) 10 a.m.: University of Michigan consumer sentiment Before the bell earnings: BlackRock, Bank of NY Mellon, JPMorgan Chase, Fastenal, Wells Fargo
Outlook for October 7-11, 2024
