US Stocks Rise as Earnings and Inflation Data Loom

Strategic Insights -

As investors await potentially volatile market sessions and a slew of earnings reports, US stock futures have moved higher on Wall Street, with the S&P 500 pointing towards a 23-point opening bell gain. This comes as the third quarter earnings season approaches, amidst growing concerns over inflation and the Federal Reserve's commitment to fighting it. The Fed's relentless rate hike path has lifted the US dollar to its highest levels in two decades, acting as a headwind to earnings growth momentum, according to data from Refinitiv. Despite this, collective S&P 500 profits are expected to grow by 4.1% to around $464 billion before rising modestly to 5.2% over the final three months of the year.

Key Takeaways:

  • US stock futures have moved higher ahead of a potentially volatile market session, with the S&P 500 pointing towards a 23-point opening bell gain.
  • The Federal Reserve's relentless rate hike path has lifted the US dollar to its highest levels in two decades, acting as a headwind to earnings growth momentum.
  • Collective S&P 500 profits are expected to grow by 4.1% to around $464 billion before rising modestly to 5.2% over the final three months of the year, according to data from Refinitiv.
  • The Bank of England has confirmed its emergency intervention into the bond market will last only until the end of the week, countering reports that indicated it could extend purchases.
  • Intel shares have moved higher in pre-market trading following a report that suggested the chipmaker is preparing to cut thousands of jobs in the coming weeks.
  • Credit Suisse shares have extended their slump following a report from Bloomberg News that suggested the Swiss bank is facing another probe by the US Department of Justice.
  • PepsiCo has posted stronger-than-expected third quarter earnings, while boosting its full-year profit forecast, as impressive gains from Frito-Lay continued to power the beverage giant's bottom line.

Statistics:

  • S&P 500 profits are expected to grow by 4.1% to around $464 billion before rising modestly to 5.2% over the final three months of the year.
  • The US dollar has reached its highest levels in two decades, with the dollar-index hitting 114.45.
  • The CME Group's FedWatch is indicating an 80% chance of a 75 basis point rate hike from the Fed next month, with a 30.8% chance of a similar-sized move in December.
  • The European Central Bank is dropping hints that it will begin selling some of the $3.2 trillion in bonds it purchased as part of its quantitative easing program once benchmark interest rates get closer to a 'neutral' level of around 2%.
  • Intel shares have been marked 1.5% higher in pre-market trading to indicate an opening bell price of $25.41 each.
  • Credit Suisse shares have been marked 3.4% lower in European trading at €4.231 each, extending their year-to-date decline to around 53%.

Sources:

  • Refinitiv
  • Bloomberg News
  • Reuters
  • CME Group's FedWatch
  • European Central Bank
  • Intel Corporation
  • Credit Suisse
  • Bloomberg News