Here are the 3 big things we’re watching in the stock market in this week
Last week started with big banks making strong profits and ended with regional lenders writing off bad loans. With earnings season ramping up and Washington remaining in a deadlock, investors are hoping for calmer waters in the coming days. Let’s take a closer look at what to expect over the next five trading days. 1. Market risks: AI trading, which powered the three-year bull market, has new competition to attract investors’ attention. Over the past week, both the escalation in US-China tensions and concerns about credit quality have suggested they could hurt the broader market. Additionally, the longer the federal government shutdown lasts, the greater the risk it poses to the economy by dampening consumer and business sentiment. As a result, investors need to follow all three stories closely. Of course, we hope that the developments will alleviate investors’ concerns rather than increase them. On the China front, at least, there was some encouraging news on Friday: Treasury Secretary Scott Bessent spoke by phone with his Chinese counterpart and later announced plans to meet with him in Malaysia; President Donald Trump acknowledged in a Fox Business interview that his threat to impose 100% tariffs on Chinese imports was “not sustainable.” Bank sentiment also improved in Friday’s session, following Thursday’s sell-off. Baird upgraded Zions Bancorp, one of the regional lenders whose bad loan warning shook the market. Meanwhile, a senior analyst from credit rating agency Moody’s defended the health of the industry in an interview with CNBC. “When we dig deeper here and look at whether there is a reversal in the credit cycle, which is really what the market is focusing on, we find no evidence,” said Marc Pinto, head of global private credit at Moody’s. 2. Earnings: Fall earnings season kicks into gear with five Club names reporting this week. Apart from the portfolio, approximately 80 companies in the S&P 500 are also scheduled to announce results. All revenue and sales estimates are from data provider LSEG. Danaher’s business in China has been under pressure due to government efforts to control health care costs, known as volume-based purchasing programs. Although last week’s earnings from Abbott Labs, which showed China still sluggish, dampened our expectations, we’ll be looking for any signs of improvement when the life sciences company reports earnings on Tuesday. Outside of China, we expect to see an acceleration in bioprocessing orders and increase the invoice-to-invoice level, the level at which a company delivers orders as soon as they are received, to comfortably above 1. (Above 1 means there is a backlog.) Overall, Danaher is expected to earn $1.72 per share on revenue of $6.01 billion. Analysts expect credit card provider Capital One to earn $4.37 per share on revenue of $15.08 billion when it reports Tuesday. Stocks were hit hard by Thursday’s bank selloff, but they recouped most of those losses on Friday. Similar American Express’ strong earnings report helped restore consumer confidence in its health, even if Capital One’s customer base is not as affluent as AmEx. However, you can expect questions about consumer spending, default rates and loan loss provisions to feature prominently in management’s call with investors. In the bigger picture, we want to learn more about Discover Financial Services’ integration five months after its closure. This will be the first earnings report to include a quarter of Discover contributions. The benefits of this blockbuster merger, which provides Capital One with a proprietary payment network that will, over time, reduce its reliance on Mastercard and Visa, are central to our investment thesis. GE Vernova is expected to report earnings of $1.62 per share on sales of $9.16 billion on Wednesday. For the gas turbine manufacturer, it’s all about margins, orders and backlogs. We’re curious to see what management has to say about all the AI data center megadeals we’ve heard about over the past month. When it comes to building AI infrastructure, getting the chips needed is one thing, but the power needed to run those data centers may prove to be the real bottleneck. Since GE Vernova’s largest gas turbines are in short supply, as are those from rivals such as Mitsubishi Heavy Industries, we’ll be listening to any comments on its production expansion plans. Jim said he would like to see GE Vernova spend a little more on expansion. Honeywell is one of two sectors in the portfolio scheduled to report on Thursday morning. The consensus is for revenue of $10.15 billion and earnings per share of $2.57. This will be the last time Honeywell reports results before the Solstice advanced materials business is terminated. While the business commentary may not have much relevance to Honeywell’s direction going forward, it will be important in understanding how Solstice’s first quarter is going. Aerospace outcomes will also be a focus. The segment missed expectations last quarter, with management attributing the weakness to original equipment manufacturer (OEM) inventory depletion. However, the team told investors that wind is expected to decrease in the remaining half of the year. We will be looking for improvements, especially given management’s plans to spin off Aerospace in the back half of 2026. Industrial automation is expected to decline again year over year; We want to know when it will return to growth. Wall Street is modeling fellow industry company Dover’s earnings per share of $2.51 on revenue of $2.11 billion reported Thursday. It’s been a tough year for Dover shares, and we’ve tried to be patient as it revitalizes its portfolio to focus on higher-margin, faster-growing businesses like clean energy components, single-use biopharmaceutical products and data center cooling. Beyond profits and sales, the metric to watch most closely is bookings, which is the best predictor of future growth. In the second quarter, bookings companywide increased 7% year over year, and management was encouraged by the trends at the beginning of the third quarter. Additionally, all five of Dover’s operating segments saw bill-to-bill ratios north of 1 in the second quarter; This means they received more orders than they fulfilled during this period. Can this be repeated in the third quarter? Finally, margins are particularly important for Dover at this stage, given its productivity investments and cost-saving efforts. 3. Economic data: The lockdown has created a lull in official government economic data. Halfway through October, the September employment report was nowhere to be found. But the Bureau of Labor Statistics called employees back to work on the consumer price index (CPI) report earlier this month. The move comes because the Social Security Administration needs third-quarter CPI data, used to calculate annual cost-of-living adjustments, before Nov. 1. While earnings season helps fill the information gap, this pause in government data comes at an extremely unfortunate time given the health of the labor market and inflationary pressures during the trade war. If the shutdown continues into next week, the first unemployment report and September new home sales report are unlikely to be released. But we’re due to receive September’s existing home sales report from the National Association of Realtors on Wednesday. Any comments on the housing market would certainly be welcome, as housing cost inflation is still running above target, helping to support the overall inflation rate despite the Federal Reserve’s best efforts. Club name Home Depot is also counting on an increase in residential activity to boost sales. Next week, Monday, October 20 Before the bell: Cleveland-Cliffs (CLF) After the bell: Crown Holdings (CCK), Zions Bancorp (ZION), Steel Dynamics (STLD), WE Berkley (WRB) Tuesday, October 21 Before the bell: Danaher (DHR), Coca-Cola (KO), GE Aerospace (GE), Elevance Health (ELV), Lockheed Martin (LMT), Philip Morris International (PM), RTX Corporation (RTX), General Motors (GM), 3M Company (MMM), Nasdaq (NDAQ), Northrop Grumman (NOC), PulteGroup (PHM), Equifax (EFX) After the bell: Capital One Financial Corp. (COF), Intuitive Surgical (ISRG), Texas Instruments (TXN), EQT Corporation (EQT), Mattel (MAT), East West Bancorp (EWBC), National Bank Holdings (NBHC), Omnicom Group (OMC), Waste Connections (WCN), Agree Realty (ADC), Bridgewater Bancshares (BWB), Pathward Financial (CASH), Cathay General Bancorp (CATY), Chubb Corporation (CB) Wednesday, October 22 Before the bell: GE Vernova (GEV), Amphenol (APH), Vertiv Holdings (VRT), Boston Scientific (BSX), Hilton Worldwide (HLT), AT&T (T), Taylor Morrison Home Corporation (TMHC), Teck Resources (TECK), BankUnited (BKU), M/I Homes (MHO), NVR Inc (NVR) After the bell: Tesla (TSLA), International Business Machines (IBM), Kinder Morgan (KMI), Quantumscape (QS), Century Communities (CCS), Texas Capital Bancshares (TCBI), Alcoa (AA), SAP SE (SAP), Lam Research (LRCX), Knight-Swift Transport Holdings (KNX), CACI International (CACI), Medpace Holdings (MEDP), O’Reilly Automotive (ORLY), Viking Therapeutics (VKTX), Lending Club (LC), Las Vegas Sands (LVS) Existing Home Sales Thursday, October 23 at 10 a.m. ET Before the bell: Honeywell International (HON), Dover (DOV), American Airlines Group (AAL), Freeport-McMoRan Copper & Gold (FCX), Dow Chemical (DOW), Hasbro (HAS), Southwest Airlines (LUV), Nokia (NOK), AutoNation (AN), T-Mobile US (TMUS), Blackstone (BX), PG & E (PCG), Rogers Communications (RCI), Simply Good Foods Company (SMPL), Valero Energy (VLO) After the bell: Intel (INTC), Newmont Mining (NEM), Alaska Air Group (ALK), Nextracer (NXT), Deckers Brands (DECK), Boyd Gaming (BYD), Ford Motor (F) Friday, October 24 Consumer Price Index (CPI) report 8:30 AM ET Before the bell: Procter & Gamble (PG), Booz Allen Hamilton Holding (BAH), Gentex (GNTX), Flagstar Financial (FLG), GrafTech International (EAF), First Hawaiian (FHB), General Dynamics (GD), HCA Healthcare (HCA), Illinois Tool Works (ITW) (Jim Cramer’s Charitable Trust has long been *** FILL*** . 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