It's been about three months since the U.S. stock market last notched an all-time high, and the S&P 500 is now sitting less than 1% below that level.
Could the market be ready to set another record? Much of that will depend on the corporate earnings season currently underway. By the end of this week, more than one-quarter of companies in the S&P 500 are scheduled to have reported results for the third quarter — and so far, this season is shaping up to be better than analysts had expected.
This week, traders will get some more data to gauge how Americans are doing, including reports on the housing market and consumer confidence. Here's what to watch and how the news could affect your bottom line.
What's happening: Two closely tracked reports detailing home sales in the month of September are due this week, along with a survey of consumer confidence.
On Tuesday, traders will see if the number of existing homes sold in September fell slightly compared with August, as economists currently forecast they did. Then on Thursday, they'll find out if sales of new homes slowed in September, as projected. Finally, Friday brings the results of the monthly consumer confidence survey conducted by the University of Michigan, which economists project will be unchanged from September.
Why it matters: Despite signs of a slowdown in parts of the U.S. economy, like manufacturing, consumers have generally appeared to be resilient. But the unexpected decline in retail sales for September caused some experts to worry that a broader economic slowdown — or even a recession — could follow. That's because consumer spending accounts for more than two-thirds of gross domestic product (GDP).
What it means for you: The housing market is perhaps one of the best gauges of confidence, because consumers need to feel optimistic about their financial situations to justify such a big expense. Despite lower mortgage rates, which make buying a home more affordable, financial concerns are holding back potential homebuyers. There's also a shortage of affordable homes on the market — and there's been a strong surge in demand that could get worse if mortgage rates fall further.
That said, it's a good time to refinance your mortgage if you have one. Many homeowners are already taking advantage of lower rates.
What's happening: Banks kicked off earnings season last week, and you can expect a slew of quarterly results from a broader array of companies this week, including Procter & Gamble on Tuesday, Caterpillar on Wednesday, Southwest Airlines on Thursday, and Aflac on Friday.
Why it matters: The multiweek period when publicly traded companies report results for the most recent quarter is busy on Wall Street. Traders have been bracing for a slowdown in profit in the third quarter, compared with the same period a year ago. If profit did indeed fall, as analysts project, it will mark three straight quarters of earnings declines — the first time this has happened since mid-2016.
So far, however, the corporate earnings season is off to a solid start. More than 75% of the S&P 500 companies that reported have topped analyst earnings expectations, according to FactSet.
What it means for you: Next week will be even busier than this week, but with more than 80 companies expected to report results this week, you can expect earnings to be a key driver behind the market's daily moves and even some more dramatic swings.
October has a spooky reputation among investors, though this month has yet to live up to that reputation. Even so, experts warn that there could be some bumpiness in the weeks ahead given the much-watched earnings season and political drama in Washington.
Still, it's important to keep in mind how well the market has done this year. The S&P 500 is up nearly 20% — and compared with five years ago, this benchmark has risen more than 50%.
Any further turbulence in the market — be it this week or the weeks ahead — can be a good opportunity for long-term investors to buy stocks at lower prices. And no matter what happens in any given week, it's important to keep perspective and remain consistent with your investment strategy.
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