MetraviseStocks close a record week as inflation data and bank earnings loom
In brief
- Record week: The S&P 500 rose +0.58% on Friday, capping a record-setting week even as other markets stayed indecisive.1
- Waller sounds hawkish: Fed Governor Waller said he anticipates more rate hikes if data come in as expected, which keeps rate risk in focus.2
- Inflation test: Economists expect Wednesday's CPI to show inflation at a four-month high, a key test for rate expectations.3
What it means
Stocks are climbing while consumers grow gloomier. The University of Michigan's preliminary October sentiment index fell to 46.3 from 48.1, and year-ahead inflation expectations ticked up to 4.7%.3 Waller called inflation too high, yet Vice Chair Jefferson and New York Fed President Williams had waved away expectations of a second hike at the meeting ending Oct. 28.2,4 The 10-year yield edged up +0.01 pts on Friday to 5.24%.
The week in review and where money is flowing
Over five sessions, the S&P 500 gained +1.16%, while the Nasdaq 100 posted a narrower +0.23%. On Metravise's one-month view, Technology is the only sector ahead of the S&P 500, by +0.2 pts, led by Semiconductor Equipment & Materials at +10.4 pts, Electronics & Computer Distribution at +10.3 pts and Semiconductors at +8.7 pts. D.A. Davidson analyst Gil Luria pointed to memory demand expected to outstrip supply in 2027 and 2028 for Micron, while Adam Crisafulli of Vital Knowledge does not expect a sharp V-shaped rebound in the AI-linked tech complex.5,6
Banks: earnings put to the test
Large-cap bank stocks sold off ahead of third-quarter earnings, but analysts said the move may not signal economic trouble.7 RBC's Gerard Cassidy said bank fundamentals remain strong and the economy is nowhere near a recession. Results from the biggest lenders offer a read on whether the recent weakness reflected the economy or simply positioning.
Market mood
The VIX fell -4.09% to 14.79, a calm reading, while the equity put/call ratio stood at 0.62 against a five-day average of 0.60, an average level. Investors look relaxed rather than heavily hedged heading into a dense data week.
What to watch this week
Times are US Eastern (ET).
- Tue 03:45Fed Governor Christopher J. Waller speaks — AIWaller speaks again after saying the labor market is stable and inflation too high, so his tone on further hikes is in focus.2
- TueJPMorgan Chase & Co. (JPM) earnings · before the openJPMorgan opens bank earnings after a pre-earnings sell-off that analysts said may not be an economic warning.7
- Wed 08:30Consumer price index (CPI)Economists expect annual inflation to rise to 3.6%, and a hotter reading is generally read as support for further Fed tightening.3
- Thu 08:30Producer price index (PPI)Producer prices are expected to rise 0.5% for the month after 0.4% in August, a gauge of pipeline price pressure.8
- Fri 09:15Industrial production and capacity utilizationCapacity utilization is expected at 76.4% versus 76.3%, and a firmer reading is generally read as a sign of steady factory activity.8
- MonBond market holidayThe bond market is closed on Monday, ahead of a week that brings both the CPI and PPI inflation reports.8
Metravise Portfolio
- PortfolioFriday change+0.40%
- —No entries or exits in the last session.
Metravise is an educational research platform — this bulletin is not investment advice. News summaries are based on the footnoted sources; numbers are Metravise data. Past performance is not indicative of future results.
Sources
- Wall Street finishes its record-setting week with gains — The Washington Post · Oct 10
- Speech by Governor Waller on the economic outlook — Federal Reserve · Oct 9
- With midterms approaching, Americans' confidence in the economy is in a tailspin — CNN · Oct 10
- Federal Reserve will take its time delivering rate hikes — Axios · Oct 9
- Micron to nearly triple as investors wake up to value, D.A. Davidson says: 'If you don't buy it, they will' — CNBC · Oct 8
- Dow rises 400 points on Friday as Wall Street scores winning week: Live updates — CNBC · Oct 10
- Wall Street sees buying opportunity in banks as shares tank ahead of earnings — CNBC · Oct 10
- What's Happening in the Markets This Week — Morningstar · Oct 9