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This Week on Wall Street |
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| Two energy stories open the week pulling in opposite directions. President Trump announced an energy ceasefire between Russia and Ukraine on Sunday, intended to spare fuel infrastructure on both sides, and by Monday morning Kyiv said Russian strikes on its power network had continued anyway. Moscow has not formally confirmed the agreement and describes contacts as ongoing, which leaves the arrangement closer to an open question than a settled one. The Gulf pulls the other way. Iran-backed Houthi forces struck Riyadh's main international airport twice over the weekend, and a drone hit a tanker off the coast of Oman on the same day. Crude held above $100 a barrel through the swings, giving back an early gain and then recovering it. For the energy complex the two threads are one question about supply: a truce that holds would return barrels and refined product to the market, while each Gulf incident reinforces the security premium already in the price. Riyadh hosts the World Petroleum Congress this week, which keeps that question in front of the industry rather than behind it. |
| Three prints this week carry the rate picture. Wednesday's consumer price index is the main one, with consensus looking for core prices to rise 0.2% in September, a step down from August, while the headline rate climbs further from a year ago. That divergence is the story in the data, with energy and goods lifting the top line while the underlying trend runs flatter. Producer prices follow Thursday and test whether costs are building at the factory gate before they reach the shelf. Jobless claims land the same morning and have stayed low even as hiring slowed, which puts the labor signal on the hiring side rather than the firing side. Existing home sales Tuesday give the first read on what a long end at multi-decade highs has done to transaction volumes. The committee meets at the end of the month, and these are the last major readings it gets before then. |
| Third-quarter earnings season opens Tuesday, and the banks go first. JPMorgan, Goldman Sachs, Citigroup and Wells Fargo report before the open, with Bank of America and Morgan Stanley following Wednesday and semiconductor results from ASML and Taiwan Semiconductor arriving later in the week. Consensus points to another quarter of double-digit profit growth at the index level, the eighth in a row. That figure is not evenly spread. Take energy out of the calculation and the growth rate falls; take technology out as well and what is left looks ordinary. So the question as reports arrive is whether the breadth underneath the headline widens or holds where it is. The banks are a useful first read, less for the results themselves than for what managements say about credit quality and loan demand with borrowing costs at multi-decade highs. The chip reports at the end of the week speak to the other pole, the capital spending cycle that has supplied a large share of index earnings growth this year. |
Where Third-Quarter Earnings Growth Is Expected to Come From |
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| Consensus has the index earning 26.8% more than a year ago in the third quarter, down from 50.3% in the second. Energy carries much of what remains at 118.8%, against a year-ago quarter that fell, with information technology at 62.6% and semiconductors alone at 126.7%. Six of the eleven sectors are expected to grow less than 10%. |
| Source: iCapital Investment Strategy Group |
Economic Releases This Week |
| Monday | None | | Tuesday | Existing Home Sales | | Wednesday | Consumer Price Index | | Thursday | Producer Price Index, Initial Jobless Claims | | Friday | None |
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Stories to Start the Week |
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What is Newton? |
| Our Newton model determines the highest probability of future price direction using advanced algorithmic and high-order mathematical techniques on the current market environment. It scores securities over multiple time periods on a 0–20 scale (0 worst, 20 best). Trend and level both matter. A name moving from 18 to 16 still signals a strong level, with slight exhaustion in the trend. ▼ 0–8 declining ▬ 9–13 neutral ▲ 14–20 strong |
| Equities | Trend | This Wk | Last Wk | | Large Cap | ▲ | 16 | 12 | | Mid Cap | ▬ | 12 | 8 | | Foreign Developed | ▬ | 9 | 9 | | Emerging Markets | ▼ | 7 | 13 | | Small Cap | ▼ | 7 | 6 |
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| Fixed Income | Trend | This Wk | Last Wk | | Floating Rate Bond | ▼ | 7 | 12 | | High Yield Bond | ▼ | 7 | 4 | | Long-Term Bond | ▼ | 7 | 1 | | Corporate Bond | ▼ | 7 | 1 | | Short Term Bond | ▼ | 6 | 7 | | Intermediate Term Bond | ▼ | 5 | 5 |
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| Sectors | Trend | This Wk | Last Wk | | Communications | ▲ | 17 | 9 | | Consumer Cyclical | ▲ | 14 | 7 | | Energy | ▲ | 14 | 6 | | Technology | ▬ | 13 | 13 | | Health Care | ▬ | 11 | 11 | | Financials | ▬ | 11 | 6 | | Consumer Defensive | ▬ | 11 | 4 | | Industrials | ▬ | 10 | 4 | | Utilities | ▬ | 9 | 8 | | Materials | ▼ | 5 | 2 | | Real Estate | ▼ | 3 | 1 |
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| Market Segments | Trend | This Wk | Last Wk | | Large Growth | ▲ | 14 | 12 | | Large Value | ▬ | 12 | 5 | | Mid-Cap Value | ▬ | 12 | 3 | | Mid-Cap Growth | ▬ | 10 | 8 | | Small Value | ▬ | 9 | 3 | | Small Growth | ▼ | 8 | 13 |
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Notable Newton Moves This Week: Scores improved broadly across equities and sectors while fixed income stayed in the declining band. Communications made the largest move, 9 to 17, taking the top sector spot, with Consumer Cyclical at 7 to 14 and Energy at 6 to 14 joining it in the strong band. Financials, Consumer Defensive and Industrials all climbed into neutral territory from the bottom of the range, and Large Cap rose 12 to 16 to lead the equity group. The exceptions ran the other way: Emerging Markets fell 13 to 7 and Small Growth 13 to 8, while Floating Rate Bond slid 12 to 7, leaving every fixed income read at 7 or below. |
Technical trading models are mathematically driven based upon historical data and trends of domestic and foreign market trading activity, including various industry and sector trading statistics within such markets. Technical trading models, through mathematical algorithms, attempt to identify when markets are likely to increase or decrease and identify appropriate entry and exit points. The primary risk of technical trading models is that historical trends and past performance cannot predict future trends and there is no assurance that the mathematical algorithms employed are designed properly, updated with new data, and can accurately predict future market, industry and sector performance.
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