Stocks kicked off the week on a strong note, with all three main indexes notching major gains Monday. Today's relief rally came as investors brushed off rising geopolitical tensions and instead looked ahead to a busy week on Wall Street – one which includes a number of high-profile earnings reports.
Market participants put escalating tensions between Israel and Hamas on the backburner Monday, choosing to focus on several key domestic events on the immediate horizon. For one, there's a jam-packed earnings calendar that includes results from streaming giant Netflix (NFLX, +1.5%) and electric vehicle maker Tesla (TSLA, +1.1%).
"Consumer spending and the strength of the global consumer will be primary drivers of this earnings season, and investors are closely watching for signs of an inflection point," says Mark Hackett, chief investment officer of Nationwide.
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Earlier today, financial firm Charles Schwab (SCHW, +4.7%) reported higher-than-expected third-quarter earnings of 77 cents, but said bank deposits were down 28% year-over-year, while revenue was 16% lower.
Additionally, a number of Federal Reserve speeches are sprinkled throughout the week. Most notable is Thursday afternoon's appearance from Fed Chair Jerome Powell. UBS Global Research chief U.S. economist Jonathan Pingle doesn't expect Powell "to assuage market participants' concerns over rising yields." Rather, the Fed chair will likely "walk a fine line between signaling a willingness to wait and not raise rates at the November meeting," while also indicating the central bank's willingness to hike rates if jobs and inflation data doesn't cool, Pingle says.
And amid a thin economic lineup, tomorrow morning's September retail sales report is noteworthy. "The data should yield insights into whether consumers are adjusting their spending habits as a reflection of their expectations for the economy going forward," says Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company.
Lululemon soars on S&P 500 news
As for today's news, Lululemon Athletica (LULU) stock soared 10.3% after S&P Dow Jones Indices said late Friday that the athletic apparel retailer will replace video game maker Activision Blizzard on the S&P 500, effective ahead of this Wednesday's open. Microsoft (MSFT, +1.5%) closed its acquisition of Activision Blizzard last Friday, October 13. Today's positive price action is just more of the same for LULU stock, which is up 30% for the year-to-date.
S&P Dow Jones Indices also said electrical equipment maker Hubbell (HUBB, +3.1%) will take the place of Merck (MRK, +0.1%) spinoff Organon (OGN, -2.7%) on the S&P 500 starting Wednesday morning.
As for the major indexes, the Nasdaq Composite jumped 1.2% to 13,567, the S&P 500 gained 1.1% to 4,373, and the Dow Jones Industrial Average added 0.9% to 33,984.
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