This week, investors’ attention will be focused on the Q3 2023 reports for several market-moving companies, and the economic reports of utmost importance that are scheduled to be published in the next few days.
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Last Friday, stocks closed another dismal week even though Jerome Powell as much as promised that the Federal Reserve will refrain from lifting rates at its next meeting, on November 1st. The Fed Chair said that a surge in long-term Treasury yields over the past month led to a sharper tightening in financial conditions, effectively replacing another Fed hike in terms of their economic impact. 10-year Treasury yields are used as a benchmarks for mortgages, credit cards, and various loans.
Despite the strong indication of another pause in rate increases, Powell reiterated that interest rates will be kept higher for longer, as inflation remains a concern. In addition, the Fed Chair warned that hotter-than-expected economic data would justify another rate increase this year. Powell’s hawkishness, coupled with geopolitical tremors and several data points reflecting the continued strength of the economy, supported another spike in 10-year Treasury yields, which surged to their 16-year high.
While so far, the earning season has provided reasons for optimism, with 74% of companies that have reported beating analysts’ EPS estimates, the pronounced rise in borrowing costs puts downward pressure on stocks. That’s why stock market investors are advised to closely follow incoming economic reports, as these will affect both borrowing costs (via Treasury yields) and the Federal Reserve’s further monetary policy decisions.
Here are three economic events that could affect your portfolio this week. For a full listing of all upcoming economic events, check out the TipRanks Economic Calendar.
» September’s S&P Global Manufacturing PMI and Services PMI (preliminary) – Tuesday, 19/24 – These reports measure business conditions in the manufacturing and services sectors, two main sectors of the U.S. economy, which directly affect economic growth. PMI indices are leading economic indicators used by economists and analysts to gain timely insights into changing economic conditions since the direction and rate of change in the PMIs usually precede changes in the overall economy.
» Q3 2023 GDP Growth Annualized (preliminary estimate) – Thursday, 10/26 – This report, released by the U.S. Bureau of Economic Analysis, will provide an initial glimpse of the U.S. economy’s health in the previous quarter. The third quarter’s economic growth is expected to come in at 4.1%, much stronger than Q2’s 2.1%, as a result of stronger-than-expected gains in exports, consumer spending, and employment.
» September’s Core Personal Consumption Expenditures (Core PCE) – Friday, 10/27 – This report, published by the U.S. Bureau of Economic Analysis, reflects the average amount of money consumers spend monthly, excluding seasonally volatile products such as food and energy. FOMC policymakers use the annual Core PCE Price Index as their primary gauge of inflation. A stronger-than-expected reading could portend a possible hawkish shift in the Fed’s forward guidance.
