JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Another volatile week ends with higher oil prices
- Fed Reserve to determine interest rate direction next week
- About one-third of S&P 500 Index companies report next week
The stock market concluded a highly volatile week with mixed results as a combination of escalating oil prices and the ongoing concerns about how companies are funding artificial intelligence (AI) infrastructure kept markets in check.
We might see another round of volatility ahead as investors react next week to a bevy of earnings results as well as , the Federal Reserve’s decision on interest rates on Wednesday. The CME FedWatch tool indicates a 90.6% probability that the Fed will keep interest rates at 3.75% to 4.0%. The expectation of a 25-basis-point hike in December is still high at 70.7%, but it has tapered off slightly from 75.5% last week.
Oil prices, which affect nearly every corner of our lives, rose to their highest level since April amid further conflict and warnings of more in the Middle East. WTI Crude Oil settled at $103.27 per barrel, up 3.8% on the day. Worries remain slightly elevated heading into the weekend, with the Cboe Volatility Index® (VIX® Index) hovering near 20, a warning sign of potential volatility.
On Friday, the technology-laden Nasdaq Composite opened to the downside. The index toyed around in the green for a short period before ending the session 0.21% lower. It’s possible investors were weighing whether Thursday’s slump was a buy-the-dip opportunity on Friday or it may be a sign that fundamentals are needed before investing further. It was the second straight week lower for the Nasdaq, which experienced its biggest one-day decline since June on Thursday.
The S&P 500 Indexgave back 0.52%. Meanwhile, the Dow Jones Industrial Average dropped 1.23% after a week of mostly flat-to-slightly higher trading. Investors appeared to rotate out of tech stocks toward more blue-chip stocks yesterday. But some of the tables turned today with a pullback from defensive sectors and tech, as traders reconsidered their actions. The energy sector gained as investors leaned into oil stocks.
We might get more insight into AI productivity and AI capital expenditures next week when Alphabet and Microsoft open their books on Wednesday, and Amazon on Thursday. It will be the busiest earnings week this year, with one-third of S&P 500 Index companies reporting. Other earnings we’re watching next week include Seagate Technology and SanDisk, as well as Coca-Cola, United Parcel Service, Caterpillar, and Mastercard – all of which might offer a better understanding of how the economy and consumers are behaving.
Happy Trading!
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