Stock Market Analysis for October 28, 2024

Overview of Last Week’s Market Performance

Last week, equity markets demonstrated resilience amid global economic uncertainties. The S&P 500 rose by 1.5%, driven by strong earnings reports from major tech companies. The Nasdaq Composite outperformed, gaining 2.3%, while the Dow Jones Industrial Average saw a modest increase of 0.9%.

Key drivers of last week’s performance included:

• Tech Earnings: Companies like Apple and Microsoft reported robust quarterly earnings, surpassing analyst expectations and fueling investor optimism.
• Inflation Data: New inflation data showed a steadying of prices, which alleviated some fears around aggressive interest rate hikes.
• Geopolitical Concerns: Although tensions in the Middle East and the Ukraine conflict persisted, markets remained relatively unfazed, focusing instead on domestic economic indicators.

Major News of the Day

As we approach the opening bell today, notable news includes:

• Federal Reserve Comments: Recent remarks from Fed officials suggest a cautious approach toward future rate hikes, indicating a potential pause in monetary tightening if inflation continues to stabilize.
• International Trade Developments: Ongoing negotiations between the United States and China regarding trade tariffs have sparked hopes for improved relations, supporting market sentiment.

Key Events to Watch

• Upcoming Earnings Reports: Markets will be closely watching upcoming earnings releases from key retail giants, including Amazon and Walmart, which could influence market direction.
• Economic Indicators: The release of the GDP growth rate early next week will be a critical indicator of economic health going forward.
• Inflation Reports: The upcoming Consumer Price Index (CPI) report will provide further insights into inflation trends and impact Fed policy decisions.

Predictions for Next Week

Looking ahead, we anticipate a mixed market response as earnings season progresses. Factors such as consumer spending data and international trade dynamics will be crucial in shaping investor sentiment. We expect:

• A potential pullback in growth stocks if retail earnings disappoint.
• Continued strength in defensive sectors like utilities and consumer staples amid economic uncertainties.

Recommendations for Buying and Selling

As the market opens today, consider the following:

• Buy Recommendations:

• SPY (SPDR S&P 500 ETF Trust): With a positive outlook on overall market health, this ETF is a strong addition to long-term portfolios.

• VIG (Vanguard Dividend Appreciation ETF): Ideal for investors seeking stable income through dividends, especially in uncertain times.

• Sell Recommendations:

• ARKK (ARK Innovation ETF): Given the volatility in tech stocks and potential rotation into value plays, reconsider exposure to speculative growth names in this ETF.

• NIO (NIO Inc.): Recent performance and competitive pressures in the EV space warrant caution. It may be prudent to lock in gains if still held in your portfolio.

Stay informed about market conditions as the week unfolds, and adjust your strategies accordingly!