Money is coming back to megacaps as the biggest week of earnings season begins.
The S&P 500 slid 1 percent between Friday, October 18, and Friday, October 25. It was the index’s first drop in seven weeks. However the Nasdaq-100 inched toward record highs, with its strongest performance relative to the broader market since the first half of September. Large growth stocks like Tesla (TSLA) and semiconductors led the move.
The big events start after the closing bell tomorrow when Alphabet (GOOGL) and Advanced Micro Devices (AMD) report quarterly results. Microsoft (MSFT) and Meta Platforms (META) follow the next afternoon. Apple (AAPL) and Amazon.com (AMZN) are on Thursday. All told, five of the market’s six trillion-dollar companies report. Gross domestic product (GDP) and key employment data are also due. Investors could additionally worry about further conflict in the Middle East.
| Biggest Gainers in the S&P 500 Last Week | |
| Tesla (TSLA) | +22% |
| Molina Healthcare (MOH) | +12% |
| Tapestry (TPR) | +12% |
| Digital Realty (DLR) | +9.5% |
| Philip Morris (PM) | +8% |
The flurry of activity comes at a time when fundamentals may be supporting the bulls. S&P Global said business activity accelerated in October as new orders rose the most in over a year. Prices also rose at the slowest pace since May 2020, a potential sign of moderating inflation. A separate report showed initial jobless claims fell more than expected.
Tesla Surges
TSLA had the biggest gain in the S&P 500 last week after CEO Elon Musk said vehicle deliveries will grow by 20-30 percent next year, well above the 15 percent expected by Wall Street. Analysts at Deutsche Bank and Morgan Stanley questioned the outlook. However Dan Ives at Wedbush expected more upside based on margin expansion and growth of AI-powered robotaxis. The stock closed at its highest price since September 2023. It also turned positive on a year-to-date basis.
Semiconductors advanced last week after Nvidia (NVDA) pushed to a new record high. Chip-equipment supplier Lam Research (LRCX) and memory-producer Western Digital (WDC) rallied on strong results as well.
Another tech-related company with a big move was Digital Realty (DLR). Technically a real-estate stock, the owner of data centers beat estimates and raised guidance. Management partially attributed the growth to AI, but also cited general demand for cloud computing.
Other big gainers included Molina Health (MOH), Tapestry (TPR) and Philip Morris (PM). MOH was under a shadow of weak government reimbursements, but it rebounded from a 52-week low after earnings and revenue beat estimates. TPR jumped after a federal judge blocked its acquisition of Capri (CPRI). PM reported strong numbers thanks to growth in its Zyn smokeless products.
Most Sectors Fall
Housing was the worst-performing group last week as higher mortgage rates hurt demand. Its 6 percent drop was the biggest in more than two years, according to TradeStation Data. Flooring-maker Mohawk Industries (MHK) had its biggest decline in four years after guidance trailed estimates. Builder PulteGroup (PHM) also reported weak margins on increased incentives, which may indicate dwellings are priced above Americans’ ability to pay.
Newmont (NEM), the only gold miner in the S&P 500, had its biggest weekly drop since the pandemic after higher costs dragged profits below estimates. The price of physical gold, nonetheless, hit a new record. Silver also reached a new 12-year high.
| Biggest Decliners in the S&P 500 Last Week | |
| Genuine Parts (GPC) | -20% |
| Mohawk Industries (MHK) | -19% |
| Newmont (NEM) | -16% |
| Universal Health (UHS) | -14% |
| Walgreen Boots Alliance (WBA) | -14% |
Banks, small-caps and materials lagged the broader market last week. All told, ten of the 11 major sectors lost value. (Consumer discretionaries were the only to advance, thanks to TSLA.) The impact on the broader market wasn’t dramatic because technology, which accounts for about one-third of the S&P 500, slid just 0.3 percent.
Bond Yields Spike
Higher borrowing costs were a drag on sentiment last week as yields on the 10- and 30-year Treasuries climbed to levels last seen in July.
Some analysts attributed the move to an expectation that Donald Trump will win reelection next week. (His support for tariffs and domestic investment is often associated with higher interest rates.) However, Roth MKM economist Michael Darda said the market simply expects fewer rate cuts because of the strong economy.
For example, CME’s FedWatch tool estimates the Federal Reserve’s target range will be 3.75-4 percent next May. A month ago, it projected roughly 3.25-3.50 percent.
If correct, some investors may see the higher rates as a longer-term positive because they maintain the potential for easing if the economy weakens. They’re also caused by stronger economic growth and not higher inflation.
Investors may watch the 4.32 percent level on the 10-year Treasury because it was an important peak running back to June 2008.
Charting the Market
Last week saw the S&P 500 test the late September high of 5,767. Holding those old peaks could suggest that old resistance has become new support — a potentially bullish pattern.
The index closed at 5,808. That was slightly above its low the previous week and the round number of 5,800.
Traders might notice that the S&P 500 declined in four of the five sessions. They might also observe it fell just 1 percent despite the vast majority (81 percent) of its members losing value. Sentiment surveys from the American Association of Individual Investors and the North American Association of Active Investment Managers separately showed a lack of bullishness.
While that kind of negativity may appear bearish, similar scenarios (like late May) saw buyers re-engage and push the index to new highs.
Given the calendar, this week’s earnings could be the potential catalyst to watch.
On the bearish side, chart watchers may watch the falling trendline along the recent highs as potential resistance.
If a bigger drop occurs, traders may eye the early-October lows around 5674 as potential support.
The Week Ahead
Today’s event calendar is quiet, but the rest of the week is busy. One-third of the S&P 500’s members announce quarterly results.
This week has several events. Megacap earnings will likely be the most important.
Today is relatively quiet. On Semiconductor (ON) announces results in the morning and Cadence Design Systems (CDNS) follows in the postmarket.
McDonald’s (MCD), Pfizer (PFE) and PayPal (PYPL) report before the opening bell tomorrow. The government’s job openings report (“JOLTS”) is also due. The afternoon features earnings from GOOGL, AMD, Snap (SNAP) and Reddit (RDDT).
Third-quarter domestic product (GDP) is on Wednesday morning, along with earnings from Caterpillar (CAT) and Eli Lilly (LLY). META, MSFT, Starbucks (SBUX), and Amgen (AMGN) are some of the big names after the closing bell.
Thursday, the last day of October, has the personal consumption expenditures (PCE) inflation number. Uber Technologies (UBER) and Merck (MRK) report in the morning. AAPL, AMZN and Intel (INTC) are some of the big post-market names.
Friday has two big monthly reports for October: non-farm payrolls and the Institute for Supply Management’s manufacturing index. Chevron (CVX) and Exxon Mobil (XOM) are the big earnings names.
