Next week's bank earnings and a number of economic reports will give U.S. stock investors a better sense of corporate profits and the probable path of interest rates, factors that have driven the recent market surge.
The consumer price index due on Wednesday is one of the last reports before the Federal Reserve meets at the end of the month to decide on interest rates. The Fed raised rates for the first time since 2023 last month to tame inflation.
Last Week Market Recap:
Major indexes closed higher on Friday, with technology stocks surging after big losses earlier in the week, sending the S&P 500 and Nasdaq to near record highs set on Tuesday. The S&P 500 gained 1.2% for the week, the Nasdaq rose 0.9%, and the Dow Jones Industrial Average climbed 0.6%. The indexes fell sharply Wednesday when the 10-year Treasury note yielded its highest rate since 2002.
The Dow finished at 51,654.95, up 0.93%, the Nasdaq Composite closed at 27,366.17, up 0.64%, and the S&P 500 finished at 7,811.54, up 1.15%.
Inflation and interest rates are likely to dominate markets. The Federal Reserve raised rates for the first time in nine months in September, and investors will get a key inflation report on Thursday that could influence the central bank’s decision in October. The Fed is not expected to raise rates again in October, but an unexpectedly high CPI reading this week would add to expectations of an increase.
This Week’s Key Earnings and Economic Events:
Third-quarter earnings season kicks off Tuesday with reports from JPMorgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC), and Citigroup (C) . Bank of America (BAC) and Morgan Stanley (MS follow on Wednesday. Analysts are forecasting earnings for the S&P 500 to rise more than 30% year over year in the quarter. Earnings reports from the banks could show how rising interest rates and energy costs are weighing on consumers and the capital markets.
On Wednesday, the Bureau of Labor Statistics will report its Consumer Price Index, which will be the key economic report of the week. The headline CPI is expected to rebound to 3.6% year over year from 3.4%, and to rise 0.6% in monthly terms from 0.4%. A higher-than-expected reading on CPI would reignite speculation of an October rate hike and test the market rally and earnings of the banking sector.
Key Market Catalysts to Watch This Week:
Banks Set to Offer Insight Into Consumers and Capital Markets
JPMorgan (JPM), Goldman Sachs (GS), Citigroup (C), and Wells Fargo (WFC) are set to report earnings on Tuesday, followed by Morgan Stanley (MS) and Bank of America (BAC) on Wednesday, finishing the list of the six largest banks' results.
Banks usually top the list of companies reporting results each quarter, providing a vital indicator for the health of the broader U.S. economy.
The stocks of the banks have been one of the worst performing sectors in the recent months, with the S&P 500 Banks Index down 7.5% in the past month as treasury yields have risen.
Among the companies set to report next week are healthcare conglomerate Johnson & Johnson (JNJ) and UnitedHealth Group (UNH), as well as asset manager BlackRock.
Markets Look to Wednesday’s Inflation Data for Fed Signals
September 12 Consumer Price Index report could decide whether the Fed raises interest rates another 25 basis points in October or waits until December, despite the latest increase. U.S. Treasury yields have surged to the longest in more than 25 years.
The Fed’s “dot plot” for September shows that the majority of participating Federal Reserve members expect at least one more 0.25% increase in interest rates this year, while four of them believe that another 50-basis points increase is in store for this year.
The latest producer price index and retail sales figures are due during the week, which will be able to provide more information on inflation. Although traders have reduced expectations of a rate hike at the Fed’s October 27-28 policy meeting, upbeat figures may reignite speculation about another increase.
Inflation Defines the U.S. Economy in 2026
If there is one word, besides "AI," that could describe the U.S. economy in 2026, "inflation" might be it. After rising sharply in late February with the outbreak of war in Iran, prices for gasoline, food, computer parts, semiconductors, and other goods remain a concern for consumers, stretching a five-year period where inflation has exceeded the Fed's target.
Sparking another jump in interest rates, the Federal Open Market Committee last month pushed its target rate up a quarter point for the first time in three years, to 3.75 percent to 4 percent, after concluding that inflation was "too high and has been for too long," according to Fed Chairman Kevin Warsh.
Musk’s Moves Put Telecom Rivals on Alert
Shares of major wireless carriers declined late in the week following SpaceX (SPCX) announcement of a deal to acquire a nationwide portfolio of low-band spectrum licenses from investment firm Grain Management.
Verizon (VZ) dropped 5% on Friday, while AT&T (T) was down nearly 7% and T-Mobile (TMUS) declined more than 6% on the prospect of Starlink entering the wireless market.
While Starlink has already established itself as a critical supplier of satellite communications, the offer marks the company's entry into the consumer cell service market. SpaceX has agreed to buy up to 14 megahertz of paired spectrum in the 800 MHz band.