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Stock market today: stocks renew their rally before the Mag 7 results

Umito October 29, 2024

Stocks rose and remained in the green on Monday as crude oil prices fell sharply on signs of restraint in the still-developing Iran-Israel conflict in the Middle East. The major indexes resumed their long march upward after a six-week winning streak ended on Friday, a day before the start of the Magnificent 7 segment’s earnings season. Indeed, with 169 companies in the With the S&P 500 expected to report earnings, this will be the busiest week of the third-quarter reporting season.

THE Dow Jones Industrial Average ended up 0.7% at 42,387. Nasdaq Composite rose 0.3%, ending the regular trading session at 18,567. And the S&P500 added 0.3% to 5,823.

Bond yields continued to rise, with the 10-year Treasury yield climbing nearly seven basis points intraday to 4.3%, its highest level since July, even after the Federal Reserve’s decision. first interest rate cut since 2020. The central bank is in a quiet period until the conclusion of the Federal Open Committee meeting at 2 p.m. Eastern Time on Thursday, November 7.

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Instead, market participants will look ahead to the busy week economic calendar for clues on what the central bank will do at next week’s meeting.

Monday was quiet on the economic data front, although investors will be looking at consumer confidence data from the Conference Board on Tuesday, ahead of the third quarter. GDP (gross domestic product) from the Bureau of Economic Analysis on Wednesday, the Personal Consumption Expenditures (PCE) Price Index from the BEA on Thursday and the October nonfarm payrolls report from the Bureau of Labor Statistics on Friday.

Everything revolves (again) around the Magnificent 7

During the penultimate week of the US presidential election campaign, markets will also evaluate the quarterly results of five of the Magnificent 7. Alphabet (GOOGLE) will lead things on the earnings schedule after Tuesday’s close. Analysts expect the company to post earnings per share of $1.84 on revenue of $86 billion.

Metaplatforms (META) And Microsoft (MSFT) will report after the close on Wednesday, and Apple (AAPL) And Amazon.com (AMZN) will report after the close on Thursday.

Analysts will review the capital spending budgets, including management commentary and guidance, of four of the Magnificent 7 for guidance on NvidiaIt is (NVDA) current and future operational environment.

Nvidia, down 0.7% on Monday but still trading within 3% of its all-time high, has surged 250% over the past 12 months and remains a key indicator as usage and deployment of artificial intelligence continues. Nvidia will report its third quarter fiscal 2025 results after the closing bell on November 20.

S&P Profits So Far

Through Friday, according to FactSet senior earnings analyst John Butters37% of S&P 500 companies have reported profits so far this season. As Butters notes, of that number, “75% reported a positive EPS surprise and 59% of S&P 500 companies reported a positive revenue surprise.”

Year-over-year earnings per share growth averages 3.6%, which would mark the index’s fifth consecutive quarter of annual growth if maintained.

“Given ongoing concerns in the market regarding inflationButters writes, “What is the S&P 500’s net profit margin for the third quarter?” According to Butters, the S&P 500’s blended net profit margin is 12%, “lower than the prior quarter’s net profit margin of 12,000.” 2% and lower than last year’s net profit margin of 12.2%, but above the five-year average of 11.5%.

This is the second consecutive quarter where the S&P 500 has posted a net profit margin equal to or greater than 12%. The last time the index reported two consecutive quarters of net profit margins of 12% or more was in the first quarter of 2022 and the second quarter of 2022.

Information technology (25% vs. 24%) leads the three sectors with year-over-year net profit margin growth, while the energy sector (8% vs. 11% ) is the worst among seven sectors with year-over-year declines.

Energy and other old-fashioned values

Energy was the only one of the 11 official sectors to close in the red, down 0.8%. US Crude Oil Futures fell 6% to $67.38 per barrel. Chevron (CLC) was down 0.2%, while fellow integrated giant Exxon Mobile (XOM) was down 0.5%. Chevron and Exxon will report results before the opening bell Friday.

3M (MMM) led the Dow Jones, made up of 30 price-weighted stocks, up more than 4% according to the JPMorgan analyst. Stephen Tusa reiterated its overweight on the stock and raised its 12-month price target from $160 to $165, representing an implied upside of more than 25% from current levels.

Tusa, which increased its target from $130 to $160 just two weeks ago, said on CNBC Halftime Report that his positive argument for MMM is based on “things are going pretty well for them compared to depressed levels”.

“As the great Judge Smales once said,” Tusa observed on CNBC, quoting the famous “Caddyshack” character played by Ted Knight, “the world needs ditch diggers too.”

MMM, Tusa notes, has been one of the most dramatic underperformers among industrial values over the past half-decade. “We believe the bottom has been reached, with a new management team and a compelling story of productivity and margins.”

Even with the story of the Magnificent 7 and AI development capturing the market’s imagination, investors will weigh management’s comments on the impact of a recent outbreak of E. coli on McDonald’s (MCD) the top and bottom lines Tuesday morning.

MCD rebounded on Monday, rising more than 1% ahead of its earnings release.

Apre-salomemanzo

Apre-salomemanzo

Stock market today: stocks renew their rally before the Mag 7 results

Umito

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Stock market today: stocks renew their rally before the Mag 7 results

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