Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
The Nasdaq and S&P 500 indexes registered rebounds after a prior week’s stock market decline, which was primarily attributed to concerns over China tariffs. Both indexes found support at their 21-day exponential moving averages, with the S&P 500 further rebounding from its 10-week moving average. This market resilience occurs as investors prepare for a busy week of corporate earnings reports, including those from Netflix and Tesla, alongside the release of critical inflation data.
Market Performance and Historical Context
The S&P 500’s recent performance suggests that any further declines this year may be limited, according to CFRA. The index recorded a gain of over 9% from June 27, when it exited a four-month consolidation, through October 10. Historically, such gains and durations are typical after full recoveries from declines of 10% to 20% since 1945. Since World War II, no significant early-year correction has been followed by another sell-off exceeding 10% within the same year.
Key Economic Data Amidst Government Shutdown
Despite an ongoing government shutdown, the release of official economic data is set to resume this week. The Consumer Price Index (CPI) for September is expected on Friday. FactSet projects a 0.3% rise in core prices, excluding food and energy, while the headline 12-month inflation rate is forecast to increase to 3.1% from 2.9%. While a potentially elevated CPI might not prevent a Federal Reserve rate cut on October 29—which markets currently see as 100% probable—it could introduce uncertainty regarding a third consecutive cut on December 10. The Bureau of Labor Statistics will publish the CPI report due to its necessity for determining Social Security cost-of-living adjustments. Additionally, S&P Global’s purchasing manager index is also slated for release on Friday.
Upcoming Earnings Reports
The third full week of October is marked by a wave of corporate earnings, with several high-profile companies scheduled to report.
Technology and Entertainment
Netflix is set to report its third-quarter results late Tuesday. Analysts will be closely monitoring the company’s progress in scaling its advertising-supported service, which is viewed as a significant growth area. FactSet polls anticipate earnings of $6.96 per share on sales of $11.51 billion for the September quarter, representing gains of 29% and 17%, respectively.
Tesla will announce its third-quarter earnings after the market closes on Wednesday. Investors are awaiting comments from CEO Elon Musk regarding the robotaxi rollout and the outlook for new vehicles and sales through the fourth quarter and into 2026. Analyst consensus projects third-quarter EPS to decline 26% to 54 cents, with sales increasing approximately 4% to $26.27 billion. However, the Sharp consensus, which tracks recent analyst revision trends, predicts earnings of 55 cents per share and revenue totaling $27.12 billion. Given record vehicle deliveries and strong energy deployments, there is a possibility that Tesla could exceed both top and bottom-line estimates.
Other technology and semiconductor firms reporting include Lam Research, which will post its fiscal first-quarter results late Wednesday, with analysts expecting a 41% year-over-year EPS increase. Amphenol, with an 81% year-to-date gain, is also due to report on Wednesday, with anticipated earnings growth of 59% and a 37% revenue increase.
Defense, Aerospace, and Industrials
A number of defense and aerospace leaders are scheduled to deliver their third-quarter results this week. Lockheed Martin, GE Aerospace, RTX, and Northrop Grumman report on Tuesday, followed by Teledyne Technologies on Wednesday. Hexcel and Textron are due on Thursday, with General Dynamics reporting on Friday. Analysts generally expect a mixed bag for the quarter, with earnings declines anticipated for Lockheed Martin, RTX, and Northrop Grumman, despite projected revenue gains. Commentary on the Middle East ceasefire and Treasury Secretary Scott Bessent’s statements regarding limiting defense contractor share buybacks will be of particular interest. GE Vernova reports Wednesday, with expected strong EPS growth and a focus on natural gas turbine backlog.
In the industrial sector, Valmont Industries reports Tuesday, with JPMorgan holding an overweight rating and a $480 price target. United Rentals is set to announce third-quarter earnings and revenue late Wednesday, with analysts expecting 4% growth in both metrics, as uncertainty over tariffs and the economic outlook continues to steer customers towards equipment rentals.
Mining and Metals
The mining and metals sector will also see significant activity. Cleveland-Cliffs opens the week on Monday, with analysts anticipating topline growth and a narrower loss compared to prior quarters. Alcoa reports late Wednesday. Freeport-McMoRan is scheduled for Thursday, with a 1% revenue slip expected following a mining incident in Indonesia, and further clarity anticipated in next month’s call. Newmont, reporting late Thursday, is projected to post a 77% EPS increase on 12% revenue growth.
Healthcare and Other Companies
Quest Diagnostics will report its third-quarter results before the market opens on Tuesday. Investors are likely to focus on the financial impact of a joint venture signed in August with Corewell Health, as well as any commentary on legislative bills related to Medicare reimbursement for diagnostic tests.
Stocks Nearing Buy Points
Despite recent market volatility, several leading stocks are hovering near potential buy points. Alnylam Pharmaceuticals, a profitable biotech firm, has narrowly entered a buy zone after flashing early buy signals. Guardant Health, a cancer diagnostics company, touched its buy point before pulling back. Walmart, seen as a defense play, received an AI boost last week and rebounded from its 10-week support level. FTAI Aviation is developing a flat base, while Cloudflare has recently formed one following solid advances.
