The Bull Market Turns Two & Earnings Season is in Full Swing

Week in Review

Last week marked the two-year milestone of the current bull market, with stocks soaring by approximately 60% since 2022. Historically, most bull markets have lasted until the end of their third year but returns tend to stabilize. We anticipate a similar trend this time, as the fundamental conditions remain sturdy but are gradually slowing.

Despite September's inflation surpassing expectations, it is unlikely to deter the Fed from its ongoing monetary easing efforts. We foresee a quarter-point rate cut at each meeting until the Fed reaches its target range of 3% to 3.5%.

However, with limited scope for valuations to increase further, it will be crucial for earnings to drive the market's growth. With the start of the third-quarter earnings season, we are on the lookout for signs of a broadening earnings landscape that can support the recent shift in market leadership.

Economic & Earnings Calendar

As the third-quarter earnings season begin in full force this week, next week's calendar is filled with major events, including reports from nearly 10% of S&P 500 companies.

Tuesday will see the earnings reports of Bank of America, Citigroup, Goldman Sachs Group, Johnson & Johnson, United Airlines Holdings, UnitedHealth Group, and Walgreens Boots Alliance. ASML Holding, Morgan Stanley, and Prologis are set to publish their quarterly results on Wednesday.

The spotlight will be on Intuitive Surgical, Netflix, and Taiwan Semiconductor Manufacturing on Thursday, followed by American Express and Procter & Gamble on Friday.

On the economic front, the Census Bureau's retail sales report for September and the National Association of Home Builders' Housing Market Index for October will be released on Thursday. On Friday, the Census Bureau will provide housing starts data for September.

Furthermore, the European Central Bank is expected to announce its third quarter-point interest-rate cut since June on Thursday, potentially bringing its benchmark rate target to 3.25%.

Chart of the Week: OpenAI’s projected costs and revenue for 2024

Disclaimer: The author of this blog is a financial advisor but may not be the right advisor for you. In fact, the author may not even be the right advisor for themselves. Please consult a qualified professional before making any financial decisions based on the content of this blog. And remember, just because the author has a fancy title and a briefcase full of spreadsheets, doesn't mean they know what they're doing.