Stock Market in Focus: Earnings and Geopolitical Concerns ( Israel – Hamas War)

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U.S. Equity Futures and Dollar Rise in Safe-Haven Trading

Investors opened the trading day with caution as U.S. equity futures slipped lower, and the dollar gained against global currencies in safe-haven trading. This unease was driven by ongoing developments in Israel’s conflict with Hamas. Investors also anticipated a slew of third-quarter earnings reports.

Monday’s Positive Momentum in Stocks

On Monday, stocks experienced a boost as the S&P 500 broke a three-day losing streak, closing more than 1% higher. This upward movement was supported by a pullback in Treasury yields, particularly benefiting large-cap tech stocks.

Retail Sales Data Sparks Yields Concerns

Treasury yields shifted course in pre-market trading. The 2-year notes rose to 4.15%, and the 10-year paper climbed above 4.80%. This was triggered by stronger-than-expected September retail sales data, which suggested a potential resurgence of inflation concerns.

Headline retail sales increased by 0.7% from August levels, reaching $704.9 billion, the highest since January and surpassing economists’ forecasts. August’s total was also revised higher to a gain of 0.8%.

Dollar Index Rises as Biden Prepares for Israel Visit

The U.S. dollar index rose by 0.22% to 106.483 as investors sought safe-haven assets, even with President Joe Biden’s upcoming visit to Israel. This visit aims to address the situation in the aftermath of Hamas’ early October attack. There are concerns that a ground offensive by Israel could lead to a larger regional conflict with potential implications for supply chains, energy output, economic growth, and financial stability.

Market’s Caution Ahead of Earnings Reports

Investors approached the opening bell on Tuesday with caution, particularly as they awaited earnings reports from companies like Goldman Sachs, Bank of America, Johnson and Johnson, Lockheed Martin, and United Airlines.

Profit Projections for S&P 500

Data from the London Stock Exchange Group indicated that collective S&P 500 profits are expected to rise by 2.2% from the previous year, amounting to a share-weighted $468.8 billion. The communications services sector, including companies like Google’s parent, Alphabet, and Facebook owner Meta Platforms, is set to lead this growth.

Anticipated Earnings Growth

Earnings growth is anticipated to gain momentum in the coming months, with forecasts predicting a 10.6% expansion in S&P 500 profits from the previous year, reaching $482.5 billion.

Futures Indicate Opening Bell Performance

As trading commenced on Wall Street, S&P 500 futures hinted at a 22-point decline at the opening bell, while Dow Jones Industrial Average futures suggested a 100-point pullback. The tech-focused Nasdaq was expected to start 104 points lower.

Oil Prices and Geopolitical Factors

Oil prices experienced early gains in New York trading. Reports of potential ease in sanctions on Venezuelan crude sales by the Biden administration were offset by ongoing tensions in the Middle East. Brent crude contracts for December delivery increased by 16 cents to $89.92 per barrel, and WTI futures for November delivery rose by 19 cents to $86.85 per barrel.

European Market Movements

In European markets, stocks in London and Frankfurt showed a modest decline, with the Stoxx 600 slipping by 0.35%. The FTSE 100, however, gained 0.26%, primarily driven by strength in oil and energy stocks.

Asian Market Highlights

In Asia, Japan’s Nikkei capitalized on Wall Street’s positive momentum from Monday, rising by 1.2%. In contrast, the MSCI ex-Japan index slipped by 0.09% as trading concluded in the region.

This article provides an overview of the key factors influencing the stock market today, including geopolitical concerns and earnings expectations.

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