Stocks rallied this week as earnings season ramped up and is so far off to a better-than-expected start. With 20% of the S & P 500 having reported financials so far, sales results have thus far been 1.4% above expectations while earnings results are 5.4% above expectations, in aggregate. While the estimates have come down in recent weeks, it could signal that investors are becoming a bit too bearish in the near term. This could set us up for more upside should subsequent results also come in better than feared. The three major averages are finished up for the week. The S & P 500 and the Dow Jones Industrial Average gained more than 4%, while the Nasdaq Composite rose 5.2% The bond market, however, remains in the driver’s seat. The rising 2-year Treasury, which hit a 15-year high of 4.6% on Friday, weighed on stock prices. That inverse correlation between bond yields and stocks was powerful enough to trump positive earnings reports. As a result, we were pacing for a relatively flat week heading into Friday. But the averages caught a bounce following a report in The Wall Street Journal that hinted at the Federal Reserve may slow the rate of hikes after the expected 75 basis points at the next meeting on Nov. 2, reducing the potential for sharper and longer slowdown. Though that’s not exactly a pivot, it would represent a shift away from the hawkish stance the Fed has maintained all year. On Thursday, according to the CME FedWatch Tool , investors were factoring in a 75% probability for a 75 basis points hike in December. That fell to 45% by Friday. Whether any of this chatter about future hikes is enough to cap the rise in Treasury yields, stabilize the major stock averages and get a bit of rebound remains to be seen. However, whatever the near-term path of equities is, as we discussed Friday, we think a well-balanced and diversified portfolio will position investors for whatever comes next. Under the hood, it was a broad-based rally with all sectors higher for the week, led by energy, technology and materials. Meanwhile, the U.S. dollar index hovered around the 112 level. Gold is holding at $1,660 per ounce. WTI crude prices remain in the mid-$80s region and the yield on the 10-year Treasury advanced to 4.2%. Looking back On the earnings front, we got results from Johnson & Johnson (JNJ), Procter & Gamble (PG), and Danaher (DHR). On the macroeconomic front: On Tuesday, industrial production was reported to have risen 0.4% in September, exceeding expectations for a 0.1% monthly advance, while capacity utilization came in at 80.3%, above the 80% expected. On Wednesday, housing starts were reported to have fallen 8.1% monthly to a seasonally adjusted annual rate (SAAR) of 1.439 million in September, below the 1.47 million rate the Street was expecting. Building permits were up 1.4% in September, short of the 1.5% advance expected. On Thursday, initial jobless claims for the week ending Oct. 15 came in at 214,000, a decrease of 12,000 from the prior week and below expectations of 232,000. Also Thursday, existing home sales were reported to have fallen 1.5% monthly and 23.8% annually in September to a SAAR of 4.71 million as rising mortgage rates take their toll on affordability. What’s ahead Earnings season ramps up next week for the Club. Within the portfolio, we will hear from Halliburton (HAL) on Tuesday before the opening bell; from Microsoft (MSFT) and Alphabet (GOOGL) on Tuesday after the closing bell; from Meta Platforms (META) and Ford (F) on Wednesday after the bell; from Linde (LIN) and Honeywell (HON) on Thursday before the bell; from Amazon (AMZN), Apple (AAPL) and Pioneer Natural Resources on Thursday after the closing bell; and from AbbVie (ABBV) on Friday before the opening bell. Here are some other earnings reports and economic numbers to watch in the week ahead: Monday, October 24 Before the bell: Royal Philips (PHG) ,Dorman Products (DORM), Bank of Hawaii (BOH), Schnitzer Steel (SCHN), Kirby Corp (KEX) After the bell: Logitech (LOGI), Brown & Brown (BRO), Range Resources (RRC), Packaging Corp (PKG), Crane (CR), Discover Fin (DFS), Zions Bancorp (ZION), Qualtrics (XM), Crown Holdings (CCK) Tuesday, October 25 Before the bell: United Parcel (UPS), Coca-Cola (KO), General Motors (GM), Cleveland Cliffs (CLF), General Electric (GE), 3M (MMM), Jet Blue (JBLU), Valero (VLO), Raytheon (RTX), Synchrony (SYF), Archer-Daniels (ADM), Kimberly-Clark (KMB), Centene (CNC), Novartis (NVS), Sherwin-Williams (SHW), Biogen (BIIB), SAP (SAP) After the bell: Visa (V), Enphase (ENPH), Chipotle (CMG), Spotify (SPOT), Texas Instruments (TXN), Mattel (MAT), Chemours (CC) Wednesday, October 26 Before the bell: Boeing (BA), Waste Management (WM), Bristol-Myers (BMY), Hilton (HLT), Kraft Heinz (KHC), Harley-Davidson (HOG), Otis (OTIS), General Dynamics (GD), Thermo Fisher (TMO), Seagate (STX), Boston Scientific (BSX), ADP (ADP) After the bell: Teledoc (TDOC), ServiceNow (NOW), Quantumscape (QS), Upwork (UPWK), KLA Corp (KLAC), O’Reilly Auto (ORLY), EQT Corp (EQT), Align (ALGN), VF Corp (VFC), Agnico-Eagle (AEM), Netgear (NTGR) 10:00 a.m. ET: New Home Sales Thursday, October 27 Before the bell: Shopify (SHOP), Caterpillar (CAT), McDonalds (MCD), Matercard (MA), Southwest (LUV), Merck (MRK), Altria (MO), Western Digital (WDC), Comcast (CMCSA), American Electric Power (AEP), Stanley Black & Decker (SWK), International Paper (IP), Textron (TXT) After the bell: Intel (INTC), Pinterest (PINS), US Steel (X), T-Mobile (TMUS), Gilead (GILD), First Solar (FSLR), Capital One (COF), Dexcom (DXCM), Zendesk (ZEN), L3Harris (LHX) 8:30 a.m. ET: Initial Jobless Claims 8:30 a.m. ET: Durable Goods Orders 8:30 a.m. ET: Gross Domestic Product Friday, October 28 Before the bell: Chevron (CVX), Exxon (XOM), Colgate-Palmolive (CL), Booz Allen (BAH), LuondellBasell (LYB), DaVita (DVA) 8:30 a.m. ET: Personal Spending (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, October 7, 2022.
Brendan McDermid | Reuters
Stocks rallied this week as earnings season ramped up and is so far off to a better-than-expected start.