The S&P 500 changed very little on Monday after the major US stock market indexes ended the previous week with gains. Investors are now looking ahead to a busy week of company earnings reports and inflation data.
The Dow Jones Industrial Average gained 114 points, or about 0.2%, on Monday. The S&P 500 traded close to its previous level, while the Nasdaq Composite fell 0.2%, CNBC reported.
Micron stock falls 4% as china chip competition grows
Micron Technology shares dropped 4%, putting pressure on the Nasdaq Composite. Investors were assessing growing competition from China’s CXMT, a memory chip maker that reported progress on a new chip structure.
Salesforce shares climbed 2%, helping support the Dow Jones Industrial Average. The gain came after Bank of America upgraded the company’s stock twice, CNBC reported.
Also read: Salesforce stock jumps 3.5% as BofA upgrades CRM to buy, sets $285 price target on AI growth
Oil prices rise as russia-ukraine tensions grow
Oil prices increased after US President Donald Trump announced an “energy ceasefire” between Russia and Ukraine over the weekend. However, Ukrainian President Volodymyr Zelenskyy later said Moscow had already violated the agreement.
West Texas Intermediate crude oil futures rose 2% to around $93 per barrel on Monday. Brent crude futures also climbed 2%, reaching about $106 per barrel.
Trump told reporters that he was considering joining Saudi Arabia in its fight against the Iran-backed Houthi group in Yemen. His comments came after another deadly attack on Riyadh’s international airport and raised concerns about rising tensions in the Middle East, according to CNBC.
The major US stock indexes ended the previous week higher, helped by a rally in technology stocks. Investors remained positive despite rising oil prices and bond yields.
Both the Dow Jones Industrial Average and the S&P 500 posted gains for the second time in three weeks. Meanwhile, the Nasdaq Composite recorded its fourth consecutive week of gains, according to CNBC. Investors hope third-quarter earnings reports will help the stock market remain strong despite ongoing tensions in the Middle East. The results are widely expected to show strong growth.
S&P 500 earnings growth seen at 29.6%
According to FactSet’s John Butters, S&P 500 companies are expected to report earnings growth of 29.6% in the third quarter. If this estimate holds, it would mark the fourth consecutive quarter in which the index records earnings growth of more than 25%.
Strong investment in artificial intelligence data centres is expected to be a major reason for the S&P 500’s continued earnings growth. Companies are spending heavily on the infrastructure needed to support AI technology, according to the CNBC report.
Beyond earnings figures, investors will pay close attention to company executives’ comments about their businesses and customers. They want to understand how companies are dealing with higher fuel costs, increased borrowing costs and uncertainty in the economy.
Brian Leonard, portfolio manager of the Keeley Gabelli Small Cap Dividend Fund (KSDIX), said investors are focusing on whether companies can handle current economic challenges, pass higher costs on to customers, maintain or improve profit margins, and deliver better results in the future, according to CNBC.
Bank earnings and US inflation data in focus
The third-quarter earnings season will gather pace this week as several major banks prepare to release their financial results. The companies expected to report include Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.
Investors will also receive important updates on US inflation this week. The September Consumer Price Index (CPI), which measures changes in consumer prices, is scheduled for release on Wednesday. The September Producer Price Index (PPI), which tracks price changes at the producer level, is due on Thursday, CNBC reported.
Inflation figures could influence market sentiment: Investors will examine the inflation reports alongside bank earnings to understand the direction of the US economy. The data will offer fresh information about price pressures as markets deal with higher energy costs and borrowing expenses.
S&P 500 bull market marks four years
This week marks four years since the start of the S&P 500’s current bull market. The index reached a closing low of 3,577.03 in October 2022 before beginning its sustained rise, according to CNBC.
Since reaching its closing low in October 2022, the S&P 500 has more than doubled in value. Investors are now watching whether strong corporate earnings can help the market maintain its gains amid inflation concerns, rising oil prices and geopolitical uncertainty.