Earnings and jobs numbers clash with caution as US stocks rebound

The Week Ahead: Earnings, Jobs Report, and Recovery

The final full week of trading for November will bring crucial earnings reports and a much-anticipated jobs report that will set the tone for the year’s final weeks. Investors are eagerly awaiting results from Nvidia (NVDA) and Walmart (WMT), which will provide insight into the AI trade and US consumer sectors, respectively. These updates will shed light on the tech and consumer industries’ performance over the past few weeks.

The past week saw a recovery in US stocks, with the Nasdaq Composite (^IXIC) closing 0.4% lower, while the S&P 500 (^GSPC) remained largely unchanged, and the Dow Jones Industrial Average (^DJI) rose by 0.3%. The government shutdown that ended on Wednesday had created uncertainty for investors, and the Fed’s interest rate decision will be a significant focus area.

Earnings Season: A Mixed Bag

This week, investors will watch closely as earnings are announced from various companies, including Home Depot (HD), Target (TGT), Lowe’s (LOW), Amer Sports (AS), and Gap (GAP). The tech sector has been experiencing volatile trading patterns, with Oracle’s (ORCL) credit default swaps blowing out. However, Nvidia’s upcoming results will be particularly significant as it is a key player in the AI trade.

The US government shutdown has caused data releases to be delayed or postponed. The economic calendar lists various reports scheduled for release this week, including new orders and existing home sales figures. However, the lack of complete information regarding the employment report may leave investors with mixed sentiments.

Economic Calendar

  • Monday:
    • Earnings: XPeng (XPEV)
    • Economic Data:
      • New York Fed Empire Manufacturing
        November (6.7 expected, 10.7 previously)
  • Tuesday:
    • Earnings:
      • Home Depot (HD)
      • Baidu (BIDU)
  • Wednesday
    • Economic data:
      MBA Mortgage Applications; Housing starts and Building permits figures for October.
    • Earnings:
      Nvidia (NVDA), Palo Alto Networks (PANW), Lowe’s (LOW), Target (TGT), TJX (TJX), Bullish (BLSH)
  • Thursday
    • Economic Data:
      • Philly Fed business outlook, November (2 expected, -12.8 previously);
      • Existing home sales, October;
      • Initial jobless claims;
        Nonfarm payrolls and unemployment rate for September
    • Earnings:
      Walmart (WMT), Warner Music (WMG)
  • Friday
    • Economic Data:
      S&P Global US manufacturing PMI and services PMI figures.

The Market’s Recovery and Volatility

Despite the tech sector’s volatility, analysts still see a potential growth story in place. The weight of evidence suggests that tech companies’ earnings will continue to drive long-term stock market returns. Earnings season highlights this narrative, with over 90% of S&P 500 companies reporting triple-digit percentage gains over the prior year.

Analysts warn investors that pullbacks are a normal part of investing and necessary for participating in long-term growth prospects. In fact, a bull market has continued to hold value since April with relatively little decline, showcasing investor confidence.

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