In the early trading session on Monday, Wall Street showed a mixed performance, setting the stage for a week packed with potentially market-moving reports. The S&P 500 was modestly higher, bouncing back from its first weekly loss in the last ten. However, the Dow Jones Industrial Average struggled, down 0.4%, with Boeing acting as a significant drag after one of its jets experienced an inflight blowout over Oregon, leading to an 8.8% decline in its stock.
The Nasdaq composite, on the other hand, demonstrated strength, rising 0.6%. Notably, the energy sector faced headwinds as crude oil prices plummeted by over 4%, impacting stocks of oil-and-gas companies. Exxon Mobil and Chevron experienced declines of 3.2% and 2.3%, respectively.
Despite the mixed performance, some sectors showed resilience. Commercial Metals Co. rose by 4.1%, reporting better-than-expected profits for the latest quarter. The company attributed this success to robust construction activity in North America, compensating for softer conditions in Europe.
Looking ahead, market participants anticipate a wave of earnings reports at the end of the week, with companies like Delta Air Lines, JPMorgan Chase, and UnitedHealth Group initiating the S&P 500’s reporting season for the final quarter of 2023.
Thursday’s release of the latest U.S. consumer inflation data is anticipated as a highlight of the week, with hopes that a cooldown in inflation might prompt the Federal Reserve to reconsider its interest rate strategy. The Fed, having recently raised rates, is expected by some on Wall Street to potentially start cutting rates as early as March.
Despite the ongoing positive sentiment in the stock market, critics caution about the potential over-optimism regarding the extent of rate cuts by the Federal Reserve in 2024. The central bank has hinted at the possibility of three cuts, but market traders have positioned for a higher number. Skeptics argue that such expectations may be too ambitious unless a recession compels the Fed to act more aggressively.
Attention is also focused on corporate profits, as they could play a pivotal role in supporting stock prices. Analysts project a modest 1.3% growth in earnings per share for S&P 500 companies in the fourth quarter of 2023 compared to the previous year.
Despite economic resilience, concerns persist about rising costs due to inflation, impacting companies’ profits. The latest earnings report from Helen of Troy, the company behind popular brands like Hydro Flask and Drybar, showed better-than-expected performance amid challenging market conditions.
On the global front, Asian markets displayed a mixed trend, with Hong Kong’s Hang Seng declining 1.9%, primarily driven by losses in property and technology shares. Shanghai stocks also fell 1.4%. The weekend’s Boeing jet incident led to broader repercussions, affecting Alaska Air Group and United Airlines, with both experiencing stock fluctuations.
As the week unfolds, market participants remain alert for potential developments in various sectors that could sway the market in either direction.
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