US equity investors will focus on the strength of the rally sparked by the presidential election while keeping an eye on Federal Reserve Chair Jerome Powell's upcoming appearance following the latest inflation data this week. US equity indexes closed higher last week following a decisive outcome in the presidential elections and as the Federal Reserve continued to ease monetary policy.
The S&P 500 and the Dow Jones Industrial Average hit another intraday record high on Friday. The headlines from President-Elect Donald Trump's camp related to signature policies such as tariffs and tax cuts will be carefully monitored, as investors aim to evaluate their impact on the markets. Additionally, they will keep a watchful eye on the key appointments the former president will make for his new administration. With over 90% of the S&P500 reporting Q3 results, the index's earnings have risen 4.1% year-over-year, surpassing the FactSet consensus as of Sept.
30, which projected a 3.9% gain, according to a D.A. Davidson note published on Friday. The Communication Services sector has outperformed, posting earnings growth at 23% versus estimates of 9.4% (91% of the sector has reported). In contrast, the Information Technology sector has lagged the most, with earnings dropping 3.5% against a consensus expectation of nearly 15% growth (75% of companies in this sector have reported). The upcoming Consumer Price Index inflation reading for October scheduled on Wednesday is not expected to provide decisive information for the Federal Open Market Committee, based on insights from Scotiabank late Friday.
This reading is one of three inflation measurements before the next FOMC decision set for Dec. 18, alongside another CPI release on Dec. 11 and the personal consumption expenditures price index, which serves as the Fed's preferred inflation measure, on Nov. 27. Last Thursday, Powell addressed a question at a Fed press briefing, stating that it is "not permitted under the law" for presidents to dismiss members of the independent central bank.
Powell is anticipated to deliver his speech this week on Thursday..