Tesla (NASDAQ:TSLA) will be the first of seven tech companies to report as corporate earnings kick into high gear. World economic leaders are set to gather in Washington and oil prices look set to remain volatile. Here’s your look at what’s happening in the markets for the week ahead.
Tesla announces
With earnings season kicking into high gear, Tesla will be one of the first major US tech companies to report, with results due after the close of trading on Wednesday.
Tesla shares have taken a hit this month after the unveiling of its long-awaited robotic axle, which some investors felt lacked concrete details. Since the start of the year, Tesla shares have underperformed the S&P 500, losing about 11% compared to the broader index’s 22.5% gain.
Although investors are more optimistic about the US economy after a strong jobs report and a 50 basis point cut in interest rates by the US Federal Reserve last month, a soft earnings report from Tesla could reignite concerns on technology stock valuations.
Stretched valuations — the S&P 500 trades at nearly 22 times forward earnings — along with high expectations for corporate results and potential volatility around the upcoming U.S. presidential election could leave stocks vulnerable to a pullback.
Semiconductor profits
In a busy week of corporate earnings, results from Texas Instruments ( NASDAQ:TXN ) and equipment company Lam Research ( NASDAQ:LRCX ) will likely be in the spotlight after a volatile week for the semiconductor industry last week.
Chip stocks fell on Tuesday after equipment maker ASML ( AS:ASML ), Europe’s largest technology company, forecast lower-than-expected sales and bookings for 2025. But the group rebounded on Thursday after TSMC (BVMF:TSMC34), which makes advanced chips used in artificial intelligence applications, said it beat forecasts by 54% of its quarterly earnings.
Semiconductor and related equipment stocks account for 11.5% of the S&P 500’s weight.
Other names set to report earnings next week include Coca-Cola ( NYSE:KO ) , IBM ( NYSE:IBM ) , General Motors ( NYSE:GM ) and Verizon ( NYSE:VZ ) .
American elements
It’s a relatively quiet week on the US economic calendar, but investors will be informed about the health of the housing sector with reports expected to come out on both existing and new home sales. There are also reports on durable goods orders, consumer sentiment and initial jobless claims.
On Wednesday, the Fed will release its Beige Book, a reading of economic conditions in the central bank’s 12 regions.
Market participants will also have the opportunity to hear from several regional Fed officials during the week, including Minneapolis Fed President Neel Kashkari, Kansas City Fed President Jeffrey Schmid, San Francisco Fed President Mary Daly, Philadelphia Fed President Patrick Harker and Richmond Fed President Thomas Barkin.
IMF meetings
World central bank chiefs and finance ministers will gather in Washington from Monday for the annual meeting of the International Monetary Fund and World Bank to discuss how countries can deal with low growth and high debt.
Last week the IMF warned that global public debt is forecast to exceed $100m by the end of this year, driven by the US and China.
High debt levels can trigger adverse market reactions and limit fiscal efforts to respond to economic shocks, the IMF said.
Meanwhile, Russian President Vladimir Putin will host a summit of BRICS leaders from Tuesday as the Kremlin seeks support in its standoff with the West. Russia says leaders from Brazil, India, China, South Africa, Egypt, the United Arab Emirates and Saudi Arabia, which account for a third of the world’s economic output, will attend.
Oil prices
Oil prices look set to remain under pressure after falling about 7% last week, as energy traders analyze the bleak demand outlook for top importer China and ongoing conflict in the Middle East.
Brent was more than 7 percent lower, while U.S. crude futures lost about 8 percent, their biggest weekly drop since early September.
Data on Friday showed China’s economy grew at the slowest pace since early 2023 in the third quarter, although September consumption and industrial production beat forecasts.
The combination of economic weakness in China along with the move to electrify transportation looks set to weigh on the demand outlook, analysts said.
Meanwhile, uncertainty remains about how the conflict in the Middle East will develop. US President Joe Biden said on Friday that there is an opportunity to deal with Israel and Iran in a way that could end their conflict in the Middle East for a time.
But Lebanon’s Hezbollah militant group said on Friday it was entering a new and escalating phase as it battles Israeli troops, dashing hopes that the death of Hamas leader Yahya Shinwar would hasten an end to the region’s escalating war.
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Reference;
Burke, N. (2024) Top 5 things to watch in markets in the week ahead By Investing.com, Investing.com. Investing.com. Available at: https://www.investing.com/news/economy/top-5-things-to-watch-in-markets-in-the-week-ahead-3671894 (Accessed: 20 October 2024).
