Mid-Week Market Minute 10.25.23

Mixed Earnings Reports; Key Economic Data This Week 

Stocks were mostly unchanged in early trading this week as investors await key economic data amid a plethora of corporate earnings reports. So far, it’s been a mixed bag in the early stages for Q3 earnings. With nearly 200 U.S. companies reporting results this week, investors will have plenty to digest. On Tuesday, we heard from market heavyweights Microsoft and Alphabet (Google). Strong revenue growth in the cloud segment pushed shares of Microsoft higher by nearly 4%. On the other hand, weakness in Alphabet’s cloud segment overshadowed an otherwise strong report and drove the stock lower by nearly 6%. 

On the economic front, Thursday will bring the first estimate of third-quarter GDP. The U.S. economy has defied widespread predictions of a recession this year, and forecasters anticipate that annualized third-quarter real GDP growth will come in around 4.5%. For reference, real GDP growth topped 5% only once from 2010 to 2020. Separately, investors will get a glimpse at the Fed’s preferred measure of inflation on Friday with the release of the PCE Price Index. On an annualized basis, core prices are expected to have risen 3.4%, a modest decline from last month’s reading of 3.5%. These key economic readings will play a crucial role in Federal Reserve’s policy-making decisions going forward. The FOMC is scheduled to conclude the next policy-setting meeting on Nov. 1, where markets are largely anticipating the central bank to leave interest rates unchanged at the current target range of 5.25% - 5.50%.

Source: GSAM, CNBC, JPMorgan

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