As markets closed on Friday, the S&P 500 and Dow Jones Industrial Average reached new highs, with the S&P 500 climbing 0.4% to nearly 5,865 and the Dow adding a modest 0.09% to finish at 43,276. The Nasdaq Composite also saw gains, rising 0.6% to 18,490, though not quite reaching a new record. Notably, Nvidia hit a fresh peak during the session.
Investor sentiment appears overwhelmingly positive, with projections suggesting the S&P 500 could ascend to at least 6,200, representing a potential 5.7% increase from current levels. If realized, this would translate to a remarkable 30% annual gain, the most substantial since 1997. Bullish outlooks extend to the Nasdaq and technology stocks in general.
Friday marked the sixth consecutive week of gains for the major averages, potentially setting the stage for a run at the record for consecutive weekly increases. The current record stands at nine weeks, occurring between the end of October 2023 and the close of 2023, with another nine-week streak ending in January 2024.
Several factors contribute to the possibility of a seventh week of gains. The third-quarter earnings season is entering its busiest period, and key macroeconomic trends appear favorable. Job growth remains steady, oil prices are declining despite Middle East tensions, and gasoline prices are trending downward. Rising mortgage rates are currently keeping home sales in check.
All eleven S&P 500 sectors are showing solid year-to-date gains. The real estate sector has climbed 11.5%, partly due to expectations of continued interest rate cuts by the Federal Reserve. Leading sectors include Information Technology (up 33%), Utilities (29% increase), Communications Services (28.3% gain), and Financials (26.5% rise).
However, risks to the prevailing bullish sentiment exist. These include the potential for a disputed presidential election, with both major campaigns likely preparing legal teams. The ongoing Middle East crisis could escalate into a larger conflict, though oil prices suggest limited concerns thus far. Additionally, unforeseen events could disrupt market expectations, a possibility that makes some market participants uneasy given the current levels of optimism.
The coming week will see significant earnings reports from major companies. Tesla is set to report on Wednesday after market close, with analysts expecting earnings of 58 cents per share, up from 53 cents a year ago. Revenue is projected at $25.6 billion, an 8.8% increase driven primarily by growth in its solar power business. Tesla’s stock has faced pressure recently, down 7.6% since October 10 and 15.6% for the month.
Amazon will report on Thursday after the closing bell. Consensus estimates put earnings at $1.14 per share, up from 86 cents in the previous year, with revenue expected to reach $156.2 billion, a 10% year-over-year increase. Amazon’s stock has gained 24.4% in 2024 but has shown recent signs of stagnation.
Other notable earnings reports include GE Aerospace, 3M, General Motors, Coca-Cola, ServiceNow, IBM, and United Parcel Service. Key economic reports to watch include the Federal Reserve’s Beige Book, existing home sales data from the National Association of Realtors, weekly jobless claims, and new home sales figures from the Census Bureau.
As the market navigates through earnings season and economic data releases, investors will be closely watching for signs that could either reinforce or challenge the current bullish narrative driving stocks to new heights.