Coming up: a big week for corporate earnings, Q3 GDP figures, August home prices

The major U.S. equity benchmarks surged over 2% on Friday on strong earnings reports and statements from Federal Reserve officials suggesting the U.S. central bank should avoid tipping the economy into a recession. For the week, the Dow and S&P 500 rose nearly 5%, while the Nasdaq gained over 5%. U.S. Treasury yields continued to rise, with the yield on the 10-year note trading above 4.2%—its highest level in over 14 years. Oil prices were little changed for the week, with the price of West Texas Intermediate (WTI) crude stabilizing near $85 per barrel. Prices were supported by a rebound in economic activity in China as the government eases coronavirus restrictions.

Next week could be the busiest of this corporate earnings season. Investors can expect results from some of the world’s largest multinational companies, including tech giants Microsoft and Apple. The week will also bring a wide array of economic updates, including the advance estimate for third-quarter gross domestic product (GDP) growth. Further updates on the housing market are expected, including August home prices and September new and pending home sales. Updates on consumer confidence will arrive with the Conference Board’s Consumer Confidence Index (CCI) on Tuesday, along with the University of Michigan’s Consumer Sentiment Index (MCSI) on Friday.

KEY TAKEAWAYS

Next week could be the busiest of the corporate earnings season. Investors can expect earnings from big tech, with Apple, Amazon, Google, Microsoft, and Meta Platforms all scheduled to report.
Other prominent companies reporting earnings next week include Visa, Mastercard, Twitter, Boeing, American Airlines, Ford, General Motors, Starbucks, The Coca Cola Company, McDonald's, Caterpillar, Intel, IBM, Merck, and ExxonMobil, among many others.
The Bureau of Economic Analysis (BEA) will release the advance estimate for third-quarter U.S. GDP growth on Thursday.
The latest updates on home prices will become available, with the release of the S&P Case-Shiller Home Price Index and Freddie Mac's National House Price Index (HPI) on Tuesday, tracking price changes in August.
Data on new and pending home sales for September will be released on Wednesday and Friday, respectively.
Updates on consumer sentiment will arrive with the Conference Board's Consumer Confidence Index (CCI) on Tuesday, followed by the University of Michigan's Consumer Sentiment Index (MCSI) on Friday.

A Big Week for Earnings

Next week could be the busiest of the corporate earnings season. Some of the largest and most prominent multinational companies in the world, including all five of the “FAAMG” companies within the technology sector, are expected to report. Microsoft and Alphabet—the parent company of Google—both report on Tuesday, along with Visa, The Coca-Cola Company, UPS, and many others. Meta Platforms, ADP, Boeing, and Ford Motor Company follow on Wednesday. On Thursday, we can expect earnings from tech giants Apple and Amazon, along with releases from Mastercard, Merck, McDonald’s, T-Mobile, Comcast, Intel, Starbucks, and Caterpillar, among many others. Energy giants ExxonMobil and Chevron report on Friday, along with pharmaceutical firms Sanofi and AbbVie.

So far, about 20% of S&P 500 companies have reported third-quarter earnings. Of the companies reporting so far, 72% have beaten their earnings projections, according to research from FactSet.1 The share of companies beating their earnings estimates for the third quarter is slightly below a five-year average of 77%. BlackRock, Netflix, Goldman Sachs, and UnitedHealth Group are among the companies having reported earnings per share (EPS) well above forecasts.

Did the Economy Grow in the Third Quarter?

On Thursday, the Bureau of Economic Analysis (BEA) will release the advance estimate of third-quarter U.S. gross domestic product (GDP), tracking the U.S. economy’s growth rate for the three months ending in September. U.S. GDP is forecasted to have expanded at a 2% seasonally-adjusted annual rate in the third quarter, after contracting 0.6% in the second quarter. A rise in the nation’s GDP would mark the first quarter of growth since the fourth quarter of 2021, following two straight quarters of contraction during the first half of 2022. While two consecutive quarters of declining GDP is often used as a proxy for a recession, economists at the Federal Reserve maintain that the U.S. economy is not currently in a recession, as the labor market and nominal wage growth remain strong.

More Insights on the Housing Market

On Tuesday, S&P Global will release its Case-Shiller National Home Price Index for the month of August. Mortgage originator Freddie Mac will also release its House Price Index (HPI) for the same month, tracking prices of single-family homes. Home prices as tracked by the Case-Shiller Index fell 0.8% in July, recording their first monthly decline since January 2019 as rising mortgage rates and declining affordability weigh on demand. On an annual basis, prices were up 16.1%, far below a record 21.2% growth rate in March. Analysts project the slowdown in the housing market will continue over the coming months, with prices projected to remain unchanged in September.

Market watchers can also expect the latest updates on home sales next week. On Wednesday, the U.S. Census Bureau will report on September new home sales, which are projected to have fallen to 630,000 from 685,000 in August. Sales of newly-built homes have trended lower in 2022 so far, and are down from a recent high of 839,000 in December of last year. On Friday, the National Association of Realtors (NAR) will release pending home sales figures for the prior month. Pending home sales fell 2% in August, declining in nine of the past ten months as housing demand wanes. Pending home sales were down 24% year-over-year.