How Will the S&P 500 Index Perform in the First Week of November?

Despite the less-than-impressive earnings of tech stocks, most indices gained momentum in the last week that ended on October 28, 2022, on the back of higher-than-expected consumer spending growth. The Dow Jones index rose 6% last week, while the S&ampP 500 and Nasdaq indices surged 4% and 2%, respectively.

Comparatively, the U.S. Treasury yields fell in recent trading sessions and touched a low of 3.9% on Thursday before rebounding to 4% yesterday. Oil prices rallied, too, as there was speculation that OPEC and its allies may cut production to support a higher pricing environment as the supply chain remains tight globally. The price of WTI (West Texas Intermediate) crude, which is the U.S. benchmark, gained 3% to end the week at $88 per barrel.

Almost six months after Elon Musk first tweeted about acquiring Twitter (NYSE: TWTR), the mercurial CEO completed the $44 billion deal last week. Soon after the acquisition was completed, several high-ranking officials were fired that included Twitter’s CEO and CFO. Musk also confirmed he plans to reduce the workforce of the social media platform and alter Twitter’s content moderation policies to enhance free speech.

Let’s see what is likely to impact the S&ampP 500 index and other indices this week.

Earnings season will be a key driver for S&ampP 500

Several companies, including pharmaceutical heavyweights such as Pfizer (NYSE: PFE), Moderna (NASDAQ: MRNA), and Eli Lilly (NYSE: LLY), will report Q3 earnings this week. Other noteworthy companies that will report earnings include Airbnb (NYSE: ABNB), Starbucks (NASDAQ: SBUX), PayPal (NASDAQ: PYPL), and Advanced Micro Devices (NASDAQ: AMD).

Investors will be closely watching the guidance provided by each of these companies to gauge consumer spending patterns and the impact of inflation as well as rising interest rates on corporate earnings.

Several tech stocks underwhelmed investors in the past week as enterprises continued to slow down hiring and focus on lowering their cost structure.

Rate hikes likely to continue by the Fed

The policymakers of the U.S. Federal Reserve will conduct a two-day meeting this Tuesday, which is known as the FOMC (Federal Open Market Committee). The U.S. Central Bank is expected to raise benchmark rates by 75 basis points to combat inflation.

In fact, the governing body has tightened monetary policy at the fastest pace in more than four decades, as rates have increased by 300 basis points since March and might end the year at 4.5%.

The U.S. economy is extremely strong

Despite significant interest rate hikes in 2022 and the rising cost of debt, the labor market in the U.S. remains strong and continues to drive inflation higher. The Bureau of Labor Statistics will report the Job Openings and Labor Turnover Report for September this Tuesday. It tracks job openings, hires, layoffs, and attrition details monthly. In August, job openings fell to 10.05 million from a peak of 11.85 million in March.

ADP, which is a leading payroll services provider globally, will release the National Employment report on Wednesday, tracking private sector payroll growth for October. Private sector payrolls are expected to rise by 198,000 in October compared to the 208,00 gain in the prior month and much lower than the 457,000 gain in April.

This Friday, the BLS will report an important economic indicator which is the nonfarm payrolls report for October. The U.S. economy is expected to add 220,000 jobs in October compared to the 263,00 jobs added in September.

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