The markets continue to navigate choppy waters, and last week was no exception. From Middle East conflicts to updates on U.S. inflation, there’s been no shortage of market-shifting events. As we look ahead to the upcoming week, it’s clear that the financial world will have its eyes on key economic reports and corporate earnings. Here’s what you need to know about the week behind and what to expect moving forward.
U.S. Jobs Data Gives Fed a Nudge
Last week’s U.S. jobs report gave a mixed message to investors. The economy added 254,000 jobs in September, far more than economists had anticipated. On top of that, revisions to earlier months showed 72,000 more jobs than previously thought. This solid data suggests the labor market remains robust, and unemployment ticked down to 4.1%.
For Wall Street, this means one thing: the Federal Reserve is likely to tread carefully with interest rate cuts. While investors hoped for larger cuts, strong employment numbers make a big cut less likely. Some analysts expect the Fed to take a small step with a 25-basis-point cut, while others think they might hold off altogether.
Inflation and What’s Next for U.S. Stocks
Inflation will take center stage this week as the latest Consumer Price Index (CPI) report drops. Investors will be watching closely, especially after months of mixed signals. Economists predict inflation will have eased slightly in September, with prices rising 2.3% year over year. If this happens, it could reinforce the idea that inflation is finally on a steady decline.
Core inflation, which strips out volatile food and energy prices, is expected to hold steady at 3.2%. As inflation cools, the pressure on the Fed to act aggressively diminishes, which could help stabilize U.S. stocks. However, Wall Street remains cautious, and inflation’s trajectory will be key in shaping investor sentiment.
Middle East Tensions and the Crypto Market
Geopolitical tension in the Middle East added another layer of uncertainty to the markets last week. The conflict between Israel and Iran escalated, dragging down sentiment in both crypto and stock markets. Cryptocurrencies in particular took a hit, with over $351 million being liquidated as investors grew jittery.
Bitcoin, Ethereum, and XRP felt the strain, and the legal troubles surrounding Ripple’s XRP continued to make waves. The U.S. SEC’s latest appeal in the XRP lawsuit added more fuel to the fire. These developments may continue to weigh on crypto markets, especially if tensions overseas show no sign of easing.
Tesla’s Big Week Ahead
Tesla will be in the spotlight this week as it prepares to reveal more details about its ambitious robotaxi project. The electric vehicle maker’s highly anticipated event is set for October 10, and investors are eager to see what’s next in Tesla’s self-driving car journey. While the robotaxi concept is exciting, analysts don’t expect it to drive Tesla’s stock higher right away. Many believe the company’s focus on autonomous vehicles will take time to become financially significant.
Last week, Tesla’s stock slipped after third-quarter deliveries missed Wall Street estimates. The company will need a strong showing this week to regain momentum, but long-term investors may still have faith in its innovation pipeline.
U.S. Earnings Season Kicks Off
This week also marks the start of the U.S. third-quarter earnings season. Big names like JPMorgan, Wells Fargo, and BlackRock will report their results, giving investors a first look at how companies have fared in a challenging economic environment. Year-over-year earnings growth is expected to be modest, at just 4.7%, the slowest pace since late 2023.
As corporate America adjusts to a lower interest rate environment, investors will be paying close attention to company guidance. How businesses plan to navigate the economic landscape will shape market sentiment in the coming weeks, especially with inflation and geopolitical concerns in the background.
