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US Corporate Earnings and Fed Remarks to Guide Markets in Critical Week

Strategic Insights

— 1 min read

US corporate earnings and comments from a slew of Federal Reserve officials are set to dominate market attention in the coming days, as investors seek guidance on when US interest rates will start to rise. Major banks including JPMorgan Chase, Citigroup, and Goldman Sachs will report their latest results, while Federal Reserve officials such as Atlanta Fed President Dennis Lockhart and Chicago Fed boss Charles Evans will provide key insights on monetary policy.

Key Takeaways:

  • US corporate earnings are expected to provide crucial information on the impact of the emerging market slowdown on earnings, with investors seeking to gauge how much bad news has been priced in.
  • Bank stocks are bracing for more volatility than in past quarters, with investors betting on a potential delay of rate hikes until 2016.
  • The Federal Reserve's reluctance to lift rates has been negative for the greenback, with the US dollar experiencing a slide in value.
  • The latest futures data shows a drop in bullish bets on the greenback, which could have implications for the currency's near-term prognosis.
  • A Fed rate increase this year remains an expectation, not a commitment, with US policy makers, including Fed Vice Chair Stanley Fischer, emphasizing the importance of future economic developments.
  • Eyes are also on China, which is set to release key economic reports on exports, imports, and consumer price index, following its surprise yuan devaluation in August.
  • In the US, key economic reports include retail sales and the Beige Book, which will provide insights into the state of the economy.
  • The market will be watching closely for updates on the timing of the first rate increase and any subsequent adjustments to the federal funds rate target.

Statistics:

  • Alcoa shares dropped 6.8 percent after reporting earnings that fell short of analysts' expectations.
  • The Dow Jones Industrial Average jumped 3.7 percent last week, while the Standard & Poor's 500 Index rallied 3.3 percent.
  • The Nasdaq Composite climbed 2.6 percent, and the Stoxx 600 Index rallied 4.3 percent in Europe last week.
  • The US dollar has slid in value following the Federal Reserve's reluctance to lift rates.
  • According to the latest futures data, bullish bets on the greenback have dropped.

Sources:

  • BusinessDesk, Oct. 12
  • Reuters, Oct. 12
  • Bloomberg
  • Reuters, Oct. 11

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