Wall Street Set for Higher Open as Investors Await Key Data and Earnings Amid Israel-Hamas Conflict
Wall Street’s main indexes are poised to open higher on Monday as investors eagerly anticipate crucial economic data and major corporate earnings set to be released this week, providing insights into the state of the U.S. economy. Meanwhile, market participants continue to monitor the ongoing Israel-Hamas conflict, further adding to the cautious atmosphere.
Long-dated U.S. Treasury yields have risen as the United States seeks to prevent further escalation in tensions. Secretary of State Antony Blinken has arrived in Israel for talks following warnings from top U.S. officials about the potential worsening of the conflict.
Despite diplomatic efforts to arrange a ceasefire, Israel continues to launch airstrikes on Gaza. Residents in Hamas-ruled Gaza report that the overnight air strikes have been the most intense yet, with the anticipation of an imminent Israeli ground offensive.
On Friday, the S&P 500 and Nasdaq experienced declines due to deteriorating consumer sentiment data and concerns about the Middle East conflict. These factors overshadowed upbeat earnings reports from major U.S. banks.
Investors have shown some signs of relief, as efforts are now being focused on containing the conflict and preventing further regional implications. Market sentiment will heavily depend on the upcoming earnings reports, which will provide crucial indications of the current economic cycle and any potential concerns of a recession.
This week, investors are eagerly awaiting the earnings reports from Goldman Sachs, Bank of America, Morgan Stanley, Johnson & Johnson, Tesla, and Netflix, among others. The third-quarter earnings for S&P 500 companies are estimated to grow by 2.2% annually, as per data from LSEG. Impressively, out of the 32 S&P 500 companies that have reported results so far, 87.5% have surpassed expectations, surpassing the long-term average of 66.5%.
Aside from earnings, investors are also keeping an eye on key economic data releases. Retail sales data for September and the Philly Fed Business Index for October are scheduled to be reported later this week.
Notably, the NY Fed’s Empire State index, which measures manufacturing activity in New York State based on current business conditions, fell to -4.60 in October, slightly better than the expected -7.
Further insights will come from speeches by Philadelphia Fed President Patrick Harker and Federal Reserve Chair Jerome Powell. Harker recently expressed his belief that the U.S. central bank has likely completed its rate-hiking cycle. Meanwhile, Chicago Fed President Austan Goolsbee has highlighted that the slowdown in U.S. inflation is not just a momentary blip, but rather an undeniable trend.
In premarket trading, Dow e-minis rose by 185 points, or 0.55%, S&P 500 e-minis were up 19.25 points, or 0.44%, and Nasdaq 100 e-minis increased by 40.25 points, or 0.27%.
Some notable stock movements include Nvidia, which fell 0.9% in premarket trading following a report that the U.S. would take steps to restrict American chipmakers from selling semiconductors to China, particularly in an effort to curtail AI chip exports. Pfizer also experienced a 0.3% decline after lowering its full-year revenue forecast by 13% on Friday. Moderna, Pfizer’s rival, suffered a 4.4% drop in stock value.
On the other hand, Lululemon Athletica saw a 6.0% increase as the sports apparel maker is set to join the S&P 500 index this week, taking the place of Activision Blizzard. Additionally, Albemarle advanced 2.1% after the world’s largest lithium chemicals maker withdrew its proposed A$6.6 billion ($4.16 billion) buyout bid for Australian lithium producer Liontown Resources.
As the day unfolds, investors eagerly anticipate the key economic data and corporate earnings that will shape market sentiment. The outcome of the Israel-Hamas conflict remains uncertain, and it will be crucial to prevent further escalation. Market participants hope that containment efforts will prevent the conflict from impacting other regions and contribute to a stable market environment.