US equity investors are gearing up for a pivotal week as they focus on quarterly results from technology giants, which are anticipated to prop up the markets that are currently at record highs. This week, amidst a backdrop of relatively benign macroeconomic data and ongoing geopolitical tensions in the Middle East, the Q3 earnings season is set to gain momentum.
A total of 110 S&P 500 companies are expected to release their financial results, as highlighted in a note from D A Davidson. The strong start to this earnings season has already led to notable gains in US equity indexes, with both the S&P 500 and Dow Jones Industrial Average achieving new record highs fueled by positive earnings reports and persistent market speculation surrounding potential interest-rate cuts amidst stable economic indicators. In the realm of technology, early reports display a buoyant trend, with 7% of information technology companies within the S&P 500 having already published their results—a report from D A Davidson indicates they achieved an impressive earnings growth rate of nearly 55%, significantly outperforming the consensus expectation of 15%.
Investors have high hopes that tech earnings will surpass the recent momentum seen in bank stocks and lead the market higher this week. Major firms such as Amazon.com, IBM, and Texas Instruments are among the industry heavyweights set to unveil their financial statements this week. According to Wedbush Securities, "We are expecting a robust 3Q tech earnings season kicking off this week, driven by overall solid enterprise spending, a rebound in digital advertising, and the ongoing AI Revolution, which we believe will propel tech stocks further upward as we approach year-end." In addition to tech giants, several non-technology mega-caps—namely Tesla, Coca-Cola Company, Verizon Communications, T-Mobile, United Parcel Service, and Colgate Palmolive—are also on the roster for earnings reports this week. On the macroeconomic front, key data releases include existing and new home sales, durable goods orders, and initial jobless claims, all of which can provide insights into the health of the US economy. Simultaneously, the geopolitical landscape remains tense, with Israel conducting airstrikes in Gaza and Lebanon while the United States navigates concerns over potential leaks of classified intelligence regarding Israel's strategic plans aimed at Iran.
Investors are also keeping a close eye on the political landscape as they anticipate updates regarding the tight race for the White House as the election date of November 5 approaches..