US Market Reaction For October 7-11: What Will Drive Dow Jones, S&P 500, Nasdaq In The Week Ahead?

The US market in the coming trading week will be influenced by a host of factors, from CPI inflation data, and Q3 earnings season to geopolitical risks. Also, economic data such as trade balance, PPI and FOMC meeting minutes will further play a key role in setting the market's tone. However, another surprise fiery escalation between Israel and Iran could take Wall Street into a frenzy, which may find support in better-than-expected economic data like the latest blockbuster job data.

Wall Street Weekly Outlook For October 7-11:

As per financial services company, Charles Schwab, next week we've got several potential market-moving catalysts, highlighted by monthly inflation data (CPI on Thursday, PPI on Friday) and the unofficial start of Q3 earnings season next Friday.

The Texas-based brokerage believes the intermediate-term technicals are bullish, but near-term price action has been choppy to sideways over the past two weeks.

Further, the latest weekly report of Charles Schwab said, that although geopolitical risk remains elevated, and the Fed may not be as accommodative as previously expected, the stronger-than-expected U.S. economic data appears to be the primary driver of the near-term direction for stocks, and that direction is higher.

Therefore, Nathan Peterson, Director of Derivatives Analysis for the Schwab, in the note said "Therefore, my overall forecast for next week is "slightly bullish." What could challenge my outlook? The most likely candidate would be any upside surprises in the CPI report."

Peterson in the note further said, "As a side note, I'm not entirely convinced that next Friday's big bank earnings reports (JPM, WFC, BK) will be met with positive post earnings reactions based on the commentary/guidance we got from them at the Barclays Global Financial Services Conference back in September."

Outside of that sector, FactSet is forecasting Q3 earnings growth for the S&P 500 to be up a healthy 4.6%, down from the 7.8% at the start of the quarter, the analyst cited.

US Market Last Week:

Dow Jones: During the trading from September 30 to October 4, the Dow Jones Industrial Average or Dow Jones or DJIA ended the week with a marginal upside of 63 points or 0.15%. By the end of Friday last week, the index was at 42,352.75.

S&P 500: The index, which holds the stock performance of 500 of the largest companies listed on exchanges, ended last week with an upside of 24.6 points or 0.43% to 5,751.07.

Nasdaq Composite: The tech-heavy index rose by 68.02 points or 0.38% during last week's session. The closing price for the week stood at 18,137.85.

It was a strong job report that came as a saviour to a beaten market due to rising tensions in the Middle East. As per the US Bureau Of Labor Statistics, total nonfarm payroll employment increased by 254,000 in September, and the unemployment rate changed little to 4.1 per cent. Employment continued to trend up in food services and drinking places, health care, government, social assistance, and construction.

Yogesh Kansal, Co-founder and CMO, Appreciate said that the September jobs report is hard proof that a soft landing is within the grasp of the Federal Reserve. There is healthy momentum in the US labour market - US companies added 254,000 jobs when the projected increase was 150,000.

Kansal added, "We will, most likely, conclude 2024 with two 25 bps cuts in November and December, without any big bang 50 bps rate cut."

However, Kansal also believed that the jobs report would have strengthened the narrative for market bulls, had it not been for the widening Middle East conflicts.