Around 70 S&P 500 companies report next week, providing results across several sectors during a third-quarter earnings season expected to be strong. Strong results may not be enough to ease investors' market concerns. As of Friday morning, 85% of the 46 S&P 500 companies that had reported beat expectations. The index was on track for a blended earnings growth rate of 29%, with that rate expected to finish the season much higher.
Tesla reports Wednesday after unveiling its long-delayed "flying car" Roadster, developed with SpaceX. Procter & Gamble, American Express, Lam Research, Texas Instruments and Meta Platforms also report next week. Traders hope strong corporate fundamentals will support a divided market. The Magnificent Seven companies are driving index performance, while the average stock is struggling. Small caps entered correction territory on Wednesday of this week. Explosive Options chief options analyst Bob Lang said the division between winning and losing stocks was unhealthy for the market.
Paul Tudor Jones said this week that 2027 could challenge stocks because of new equity supply from major technology initial public offerings and a ballooning U.S. fiscal deficit. Higher interest rates, elevated oil prices and upward pressure on bond yields are adding pressure. Traders who heard Federal Reserve Chairman Kevin Warsh speak last night at an IMF event in Bangkok inferred that the central bank would hold rates steady at month-end. Fed funds futures pricing also indicated the potential for two rate increases by the end of December.
Concerns about an approaching slowdown in artificial intelligence spending are expected to shape relative performance across the market. Those concerns partly explain why the VanEck Semiconductor ETF (SMH) was down for a ninth consecutive day on Friday, a streak last seen in 2006. Earnings also appear to be peaking, with energy and technology driving most of the S&P 500's expected growth this season. Bank of America said this week that earnings growth outside those sectors was expected to slow to 7% in the third quarter from 12% in the second.
The bull market turned four this week, a milestone that historically suggests further gains, although potentially more modest ones. However, Lang said concerns about rates, artificial intelligence spending and earnings sustainability could cause a 5% stock market pullback by year-end. Those factors could also cloud next year's market outlook. Lang said revenue and earnings growth could not remain at 20% to 30% every quarter indefinitely and would eventually slow. Lang said persistently expensive or increasingly costly borrowing would eventually hurt the broader economy.
Monday, October 19 brings the October NAHB Housing Market Index at 10:00 a.m. Eastern Time. W.R. Berkley, Steel Dynamics and Fifth Third Bancorp are scheduled to report earnings Monday.
Tuesday, October 20 brings ADP weekly employment change for October 3 at 8:15 a.m., September housing starts at 8:30 a.m. and September pending home sales at 10:00 a.m., all Eastern Time. Capital One Financial, United Airlines, Netflix, Genuine Parts Company, MSCI, Halliburton, 3M, KeyCorp, Hasbro, General Motors, Equifax, Synchrony Financial, RTX, Philip Morris International, Northrop Grumman and GE Aerospace are scheduled to report earnings Tuesday.
Wednesday, October 21 brings scheduled earnings from Crown Castle, International Business Machines, Lam Research, Texas Instruments, United Rentals, Tesla, Rollins, Southwest Airlines, Globe Life, CSX, Abbott Laboratories, Moody's, Westinghouse Air Brake Technologies, Thermo Fisher Scientific, Elevance Health, Danaher, AT&T, Northern Trust, NextEra Energy, CME Group and Meta Platforms.
Thursday, October 22 brings initial jobless claims for October 17 at 8:30 a.m. and September leading indicators at 10:00 a.m., both Eastern Time. Procter & Gamble, Nasdaq, Tractor Supply, Roper Technologies, CBRE Group, Valero Energy, PulteGroup, PG&E, Lockheed Martin, Huntington Bancshares, Quest Diagnostics, Comcast, Blackstone and Norfolk Southern are scheduled to report earnings Thursday.
Friday, October 23 brings preliminary October S&P Global manufacturing and services PMIs at 9:45 a.m. and final October Michigan sentiment at 10:00 a.m., all Eastern Time. SLB and American Express are scheduled to report earnings Friday.
Upcoming Earnings Season May Fail to Ease Market Concerns
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Summary
Market trends show around 70 S&P 500 companies will report earnings next week, with strong results expected but possibly failing to calm investor worries. Tesla, Procter & Gamble, and Meta Platforms are among the key names reporting. Analysts point to a divided market outlook, rising interest rates, and slowing AI spending, which could trigger a stock market pullback by year-end.
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