This week will be an eventful one, with earnings reports due from Apple, McDonald’s, Pfizer, AMD, Caterpillar, Stellantis, Qualcomm, PayPal, Airbnb, and Starbucks, among others. Central banks around the world, including the U.S. Federal Reserve, Bank of England (BoE), and Bank of Japan (BoJ) will also meet to discuss and set interest rates. In the U.S., we’ll get the latest updates on the labor market, including the nonfarm payrolls report for October, along with home prices and PMI survey readings. Preliminary third-quarter gross domestic product (GDP) and inflation readings for the eurozone will come out on Tuesday, gauging the bloc’s recent economic performance.
A Busy Week of Earnings
We can expect another busy week of corporate earnings, with results due from McDonald’s, HSBC, and Pinterest on Monday, followed by Pfizer, AMD, Caterpillar, and Stellantis on Tuesday. Qualcomm, Airbnb, and PayPal are among the companies set to report on Wednesday, while Thursday’s lineup will feature Eli Lilly, Shell, ConocoPhillips, Starbucks, and Booking.com, along with tech giant Apple. Energy companies Enbridge and Dominion Energy are among those reporting Friday to round out the week.
As of Friday, just under half of S&P 500 companies have reported earnings for the latest quarter, as we near the midpoint of earnings season. Of these, 78% have reported an earnings beat, with the average result coming in 7.7% above consensus estimates. On aggregate, S&P 500 companies are reporting year-over-year growth in earnings for the first time since the third quarter of last year, FactSet analysts said.
Global Central Banks Meet on Monetary Policy
This week, central banks around the world, including the U.S. Federal Reserve, Bank of England (BoE), and Bank of Japan (BoJ) will meet to set interest rates, after the European Central Bank (ECB) held its latest policy meeting on Thursday. The Federal Open Market Committee (FOMC), the Fed’s rate-setting committee, will hold its two-day policy meeting on Tuesday and Wednesday.
The Fed is widely expected to hold its benchmark federal funds rate steady in a range of 5.25% to 5.5% for the second consecutive meeting, after hiking interest rates 11 times since early last year in an effort to tame the most rampant inflation in four decades. Policymakers including Chair Jerome Powell have said they intend to keep interest rates higher for longer as inflation remains elevated. Rates aren’t expected to come down until mid-2024 at the earliest, according to fed funds futures data collected by CME Group.
The Latest Jobs Reports
We’ll get the latest updates on the labor market this week, beginning on Wednesday with the Job Openings and Labor Turnover Survey (JOLTS) for September, which tracks the number of openings, hires, quits, and separations for a given month. Also on Wednesday, payroll services provider ADP will issue its National Employment Report for October, tracking gains in private sector payrolls. This will set the stage for the Labor Department’s nonfarm payrolls report on Friday. The U.S. economy likely added just over 170,000 jobs in October, after a stronger-than-expected gain of 336,000 in September, which marked the best month for job growth since January.
If job growth beats estimates again by a significant margin, it would underscore the strength and resilience of the labor market despite the impact of the Fed’s rate hikes. It would also suggest the economy is off to a strong start in the fourth quarter, after GDP rose at the fastest pace in almost two years in the third quarter.
An Update on Home Prices
On Tuesday, we’ll get the latest updates on national home prices, with the Case-Shiller National Home Price Index and Federal Housing Finance Agency’s House Price Index (HPI) for August. After declining slightly in the second half of last year, as the Fed’s rate hikes started to take a toll on the housing market, home prices as tracked by the Case-Shiller Index have now rebounded for six straight months, reaching a new all-time high. The fact that prices are hitting new all-time highs despite soaring mortgage rates is a sign of how limited housing inventory is, as homeowners who locked in record-low mortgage rates early in the pandemic are reluctant to sell. Soaring mortgage rates combined with very low inventory, particularly for existing homes, have resulted in the least affordable housing market in almost four decades.