US Stock Surge Faces Test From Tech Earnings And Election

What’s going on here?

The US stock market’s strong 22% rise this year faces challenges. Tech earnings and the approaching presidential election could cause turbulence for the S&P 500.

What does this mean?

The S&P 500 may be riding high, but it’s vulnerable with its steep price-to-earnings ratio, especially if tech giants falter in their earnings reports. Five major tech firms – Alphabet, Microsoft, Meta, Apple, and Amazon – will disclose their results next week, with massive attention on their AI investments. They’re anticipated to boost AI spending by 40% this year, while the broader S&P cuts it by 1%. Economic indicators like the November 1 US jobs report predicting 140,000 new jobs could influence Federal Reserve actions, affecting bonds and inflation outlooks. With the presidential election on November 5 and the Fed’s decision on November 7, UBS analysts predict heightened market volatility.

Why should I care?

For markets: Volatility in the air.

Benchmark Treasury yields have soared to three-month highs, signaling expectations of stricter Federal Reserve policies and potential changes with a new president. These trends suggest the bond market anticipates turbulence. Tech sector earnings and economic data should be watched closely by investors for hints on market trajectories during these uncertain times.

The bigger picture: Election jitters.

The looming US presidential election injects uncertainty into global markets. New policies from the incoming administration could bring major economic shifts, while the Federal Reserve’s November meeting might hint at future rate changes. Both factors contribute to increased volatility as traders assess the potential implications for global trade and economic stability.

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Originally Posted October 25, 2024 – US Stock Surge Faces Test From Tech Earnings And Election