This week’s key economic data releases and corporate earnings reports are expected to provide critical insights into the trajectory of inflation, interest rates, and corporate profitability, factors that have heavily influenced financial markets in recent months.
The S&P 500 recently reached a new closing high on October 6, marking its best level since mid-August and achieving more than a 14% gain for the year to date. Investors are closely monitoring upcoming data, including the Consumer Price Index (CPI) report scheduled for October 14, which may influence the Federal Reserve’s policy decisions at the end of the month. The Fed raised interest rates in September—the first increase since 2023—in an effort to rein in inflation.
Earnings season is underway with major U.S. banks set to release quarterly results next week. JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo will report on October 13, followed by Morgan Stanley and Bank of America on October 14. These six institutions typically lead the earnings season, offering important signals about the overall economy’s health. Analysts anticipate a strong quarter overall for U.S. corporate profits, with third-quarter earnings for S&P 500 companies expected to have risen more than 30% compared to a year earlier, according to LSEG IBES data.
“Earnings have been incredible this year, and we’re just going to have to start to see with the banks how Q3 shaped up,” said Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments. Despite this optimistic backdrop, bank stocks have recently underperformed, with the S&P 500 banks index declining 7.5% over the past month amid rising Treasury yields. This underperformance has raised concerns about underlying challenges in the financial sector.
Matt Stucky, chief portfolio manager of equities at Northwestern Mutual Wealth Management, emphasized the importance of understanding how elevated interest rates impact both capital markets and consumer spending. “We’ve seen rates back up. We’ve seen energy costs back up. And the question is, how is this impacting the consumer?” he remarked.
The CPI report is expected to show a 3.7% year-over-year increase in consumer prices for September, with the core inflation measure—which excludes food and energy—projected to rise by 2.5%, according to a Reuters poll. The Federal Reserve aims to bring inflation back to its 2% target but has faced challenges, particularly with persistent services inflation that some analysts describe as “sticky.”
Michael Reynolds, vice president of investment strategy at Glenmede, highlighted concerns around this persistent inflation in the services sector. “We really want to see material progress on core services inflation to get a little bit more confident that the Fed doesn’t have to be as aggressive as maybe the market’s pricing in,” he said.
In addition to banks, other major companies scheduled to report earnings this week include healthcare giants Johnson & Johnson and UnitedHealth Group, as well as asset manager BlackRock. The results and economic data releases will collectively guide investor expectations ahead of the Federal Reserve’s policy meeting later this month.