Stocks ended Friday with what seemed like a slow day, even though the Standard & Poor's 500 Index and the Dow Jones Industrial Average both closed at new highs.
The S&P 500 was up just 0.4% to nearly 5,865, and the Dow added just 0.09%, all of 36 points, to finish at 43,276. The Nasdaq Composite Index rose 0.6% to 18,490. It wasn't a new high, though Nvidia (NVDA) did hit a new high.
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Investors seem ecstatic. There are projections that the S&P 500 will rise to at least 6,200, a 5.7% gain from 5,865 now. It would mean a 30% gain for the year, the biggest since 1997. There are bullish calls on the Nasdaq and on tech stocks overall.
The major averages closed higher for a sixth straight week on Friday. In theory, the markets could make a run at the record for the number of weekly gains.
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That was nine weeks between the end of October 2023 and the end of trading in 2023, and another nine-week stretch ended in January 2004.
A big week for earnings
The pieces in place suggest a seventh week of gains is possible:
The third-quarter earnings season is about to hit its heaviest few weeks.
The big macro trends are favorable:
- Job growth looks steady.
- Oil prices are sliding in spite of all the Middle East tensions.
- Gasoline prices are moving lower.
- Rising mortgage rates are keeping home sales in check for now.
- All 11 S&P 500 sectors are solidly ahead on the year. Real estate is up 11.5%, partly because the Federal Reserve is expected to continue cutting rates. The leaders: Information Technology, up 33%; Utilities, up 29%; Communications Services, up 28.3%; and Financials, up 26.5%.
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The risks to the extreme bullishness
The obvious risks are:
A disputed Presidential election. You can bet the Trump-Vance and Harris-Walz campaigns are organizing their lawyers.
The Middle East crisis spin into major war. So far, despite all the death and destruction, the long-lived conflicts have remained geographically focused. That's one reason why crude oil dropped below $70 a barrel on Friday.
The unknown unknown. The bullishness seen this past week (which includes heavy betting that Donald Trump will win the election) does not allow for a serious mistake. It's so pervasive that "It makes me nervous," said Los Angeles money manager Julie Biel, a CNBC's Fast Money program participant, on Friday. She's right: Strange things can and will happen. The 2008-09 financial crisis erupted because too many people in the financial industry failed to see how vulnerable their institutions were to loose lending practices.
Tesla and Amazon: the week's top earnings reports
For drama, Tesla (TSLA) will provide it.
The shares fell 8.8% a day after the company unveiled its Cybercar, the taxi vehicle CEO Elon Musk promised last spring. As of Friday, when the shares finished at $220.70, they're still down 7.6% from Oct. 10 and off 15.6% for the month.
So, Wednesday's earnings report, which comes after the close, is important.
The company is expected to report 58 cents a share in earnings, up from 53 cents a share a year ago. The revenue estimate is $25.6 billion, up 8.8%, mostly because of growth in its solar power business. However, its vehicle business faces soft sales and more competition.
Expect questions about Tesla's driver assistance system, which Tesla calls Full-Self Driving. There have been reports of accidents that occurred in reduced visibility conditions — sun glare, fog, or airborne dust
Amazon.com (AMZN) reports after Thursday's close. The consensus estimate is $1.14 a share, up from 86 cents a year ago. Revenue is pegged at $156.2 billion, up 10% from a year ago.
The shares are up 24.4% in 2024, but they've stalled of late: up just 1.4% in October after falling 3.6% in the third quarter after a mixed second-quarter earnings report. After falling to as low as $151.61 in August, the shares have risen 24.7%.
The company faces challenges: increased online sales competition from Walmart (WMT) , plus Chinese competitors Temu and Shein. A second issue: How will it react to artificial intelligence impacts on its big Amazon Web Services business from Microsoft (MSFT) ?
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Boeing shares may rise if workers OK contract
But that's a big if.
The 33,000 striking workers will vote Wednesday on a new Boeing (BA) contract offer. The company and machinists' union agreed to the vote on Saturday.
Union management didn't endorse the deal but told members it was "worthy of your consideration."
It includes a 35% wage increase over four years. It does not restore the old Boeing pension plan, a key union demand.
The workers, who have been on strike for more than five weeks, may feel the need to return to work. Boeing needs planes to sell that customers feel confident about.
Investors want to see the company rebuild its finances. The shares are down 40.5% in 2024.
Reports also coming this week
GE Aerospace (GE) , due Tuesday. Earnings estimate: $1.13, up from 82 cents a year ago.
3M (MMM) , due Tuesday. EPS estimate, $1.93, down from $2.68.
General Motors (GM) , due Tuesday. EPS estimate, $2.50, up from $2.28.
Coca-Cola (KO) , due Wednesday. EPS estimate, 74 cents, unchanged.
ServiceNow (NOW) , due Wednesday. EPS estimate, $1.66, up from $1.21.
IBM (IBM) , due Wednesday. EPS estimate, $2.25, up from $2.20.
United Parcel Service (UPS) , due Thursday. EPS estimate, $1.65, up from $1.57.
Economic reports to watch
Four are worth perusing closely:
The Beige Book, a Federal Reserve-produce narrative snapshot on the economy, comes out Wednesday.
Also, on Wednesday, the National Association of Realtors will report on September existing home sales. It will show flat sales at best.
Thursday brings the weekly jobless claims report. Claims have stayed low, confirming evidence the economy is not slowing.
The Census Bureau will release its new-home sales report for September.
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