Stocks Closed Lower On Friday, Apple Earnings Out This Afternoon
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Stocks closed sharply lower on Friday with the tech-heavy Nasdaq taking the brunt of it, shedding -2.86%. The S&P was down -1.82%, and the small-cap Russell 2000 was down -1.66%. The big three indexes were all down for the week, while the Russell and mid-cap S&P 400 finished higher for the week.
Disappointing earnings last week from some big tech players like Alphabet and Amazon, not to mention Meta the week before, weighed on stocks. Both Alphabet and Amazon reported negative quarterly EPS growth rates, and negative free-cash flows, and cited big capex (and rising) as the culprit. While all three posted double-digit sales growth, the worry over AI spending and if it'll generate profits quick enough to justify current valuations have hit stocks.
Earnings season continues this week with Apple reporting today after the close. They have not been a big AI capex infrastructure spender so far. What investors will be watching are early results from their iPhone 18 sales, and any commentary they share on demand for their Duo foldable iPhone. The consensus is for EPS of $1.98, with the 'whisper' number at $2.00.
Apple, of course, isn't the only marquee company on deck to report today. We'll also hear from Marriott and Loews before the open, along with Palantir, Vertex Pharmaceuticals and ON Semiconductor after the close. All in all, we'll hear from 162 companies today.
It'll also be a busy week with as many as 1,852 companies in queue to report.
Despite some disappointing numbers shared by some of tech's biggest names last week, earnings season is off to a strong start. And it's expected to stay that way. Q3 S&P earnings growth is forecast at 26.5%. And Q4 is expected to come in at 28.4%.
In other news, Friday's Chicago PMI was at 55.3 for October vs. last month's 58.8 and views for 56.0.
Today we'll get the ISM Manufacturing Index and Construction Spending.
But the main event, economic report-wise, will be Friday's Employment Situation report by the Bureau of Labor Statistics (BLS).
It's also worth mentioning that tomorrow (Tuesday, November 3rd), is midterm election day. Regardless of politics, stocks typically rally after midterms. Since 1950, between election day and the end of the year, it's higher 68% of the time. Looking out over a 12-month period from midterms, the odds improve even more dramatically with the S&P up every time with an average gain of more than 15%.
In spite of the recent volatility, I'm expecting a strong finish to the year. With seasonality on our side, and a strong economy, not to mention the ongoing AI boom, it looks like there's a lot more upside to go. And not just this year, but next year as well.
So make sure you're talking full advantage of it.
See you tomorrow,

, Zacks Investment Research
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