Earlier on Monday, Israeli forces stepped up ground operations in Gaza as the conflict entered its fourth week, with Palestinians reporting heavy airstrikes and shelling.
Morgan Stanley's Michael Wilson, a prominent Wall Street bear, believes the chances of the S&P 500 rising next quarter have become "significantly diminished." He cited shrinking market breadth, cautious factor leadership, lower earnings revisions and declining consumer and business confidence. Meanwhile, Goldman Sachs equity strategists led by David Kostin weighed in on the relationship between Treasury yields and stock returns. "Stocks typically get some relief when yields stop rising," Costin wrote in a note to clients.
Dow component McDonald's ( #MCD +0.25% ) rose as new products and higher-priced burgers pushed third-quarter earnings above expectations. Raymond James downgraded Dow component Cisco ( #CSCO -0.23% ) stock on expectations of lower sales. Piper Sandler reiterated its Outperform rating and $425 per share price target on fellow Dow component Microsoft ( #MSFT +2.70% ).
Major U.S. stock indexes are already oversold after two weeks of losses and are expected to rebound. However, caution is warranted as there are 3 influential events that will move the market this week, they are: The Federal Reserve will decide on interest rate policy on Wednesday, Apple (#AAPL) will report earnings after the close on Thursday, and Friday morning's non-farm payrolls data. Investors are already bracing for interest rates to remain high for a long time, so the Fed's decision couldn't be worse. I think Apple's earnings are key to the market. Unfortunately, I don't think the market will react well to Apple's earnings, whether they are good or bad. With a PEG of 4.51 and EPS expected to grow at just 6.27% annually over the next five years, it's hard for investors to get excited about the future. Therefore, expect a two-day rally early this week before another decline following Apple's earnings report.
Major stock market indexes were higher this morning, with the Dow, S&P 500 and Nasdaq up an average of 1%. Support for the S&P 500 is at 4100, with resistance at the 200-day moving average at 4241. Treasury Trust TLT fell 0.75% and the 10-year Treasury yield (#TNX) rose to 4.892%. Oil prices fell 1.49% to $84.05. Gold rose 0.48% to $2,008. The dollar fell 0.26%.
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