Investors will be hoping for treats, not tricks.
It’s Halloween week and there is the potential for plenty of treats for investors as the week is stuffed with goodies.
Most notably, the Federal Reserve’s Federal Open Market Committee (FOMC) meets Tuesday and Wednesday to determine whether or not to lower interest rates for the second straight month.
In September, the FOMC lowered rates for the first time this year, dropping them to the 4.00% to 4.25% range. With the labor market weakening and inflation still rising, it is widely expected that the FOMC will lower rates again this week.
CME FedWatch, which polls interest rate traders, shows that 96.7% anticipate a 25-basis-point cut this week to the 3.75% to 4.00% range.
Stocks have been rising over the past two weeks, perhaps in anticipation of another reduction in rates, so some of the gains may already be baked in. But certainly, if the FOMC does lower rates as expected, markets should expect a bump.
5 of the Magnificent 7 report earnings this week
Along with the FOMC, it is Magnificent 7 Week, as five of the seven largest companies by market cap report earnings this week. All of them are expected to have strong quarters, which could provide some more fuel for stocks. Here’s are the estimated totals for each.
- October 29
- Alphabet (NASDAQ:GOOG): $100B in revenue, up 13% year-over-year. Earnings of $2.28 per share, up 8% year-over-year.
- Microsoft (NASDAQ:MSFT): $75B in revenue, up 14% year-over-year. Earnings of $3.66 per share, up 11% year-over-year.
- Meta Platforms (NASDAQ:META): $49B in revenue, up 22% year-over-year. Earnings of $6.72 per share, up 11% year-over-year.
- October 30
- Amazon (NASDAQ:AMZN): $178B in revenue, up 12% year-over-year. Earnings of $1.57 per share, up 9% year-over-year.
- Apple (NASDAQ:AAPL): $1.2 billion in revenue, up 8% year-over-year. Earnings of $1.76 per share, up 81%.
In the case of Apple, the anticipated earnings growth is so large because there was a special one-time charge of $10 billion related to a tax dispute with the European Union in the same quarter a year ago. Apple’s adjusted earnings for the September quarter are expected to increase by about 8%.
If these technology giants meet or exceed their targets, it could be a very good week for stocks, as these large players typically move markets. Then again, if some of them miss revenue or earnings estimates, it could spark a selloff due to uncertainty over tariffs or macroeconomic concerns.
One area to watch, particularly regarding Apple and Amazon, is the impact of tariffs on their earnings or outlook.
