Wall Street is debating whether the bear market still has legs

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Good morning, will see a surge of quarterly earnings reports. Some of the big names due include Netflix, Tesla, Johnson & Johnson, and Goldman Sachs. So far, results from the big Wall Street banks have been mixed, with JPMorgan and Citigroup beating but Morgan Stanley falling short of forecasts.
Tesla’s earnings report on Wednesday is also notable since CEO Elon Musk recently fueled speculation that the EV maker could announce its first-ever stock buyback. If that does happen, it could coincide with with the third-quarter release.
The slate of upcoming economic reports is less dramatic, though Wednesday will feature housing starts and the Beige Book, which will set up the Federal Reserve for its next policy meeting in November. Wall Street is widely pricing in a fourth consecutive rate hike of 75 basis points.
1. Wall Street is debating whether the massive upside reversal on Thursday was real or a head-fake. From intraday lows to highs, the Dow Jones Industrial Average saw a 1,500-point swing. For the S&P 500, Thursday marked the fifth largest intraday reversal from a low. And for the Nasdaq, it was the fourth largest.
Bank of America researchers said in a note Friday that the stunning rally in US stocks represented a bullish “bear hug” that doesn’t yet mark the start of a sustainable upswing. Michael Hartnett, the firm’s chief investment strategist, attributed the turnaround to buying power triggered by extreme oversold conditions.
Looking forward, he still sees a “Big Low” coming in markets — but is waiting first for signs of panic from the Fed. He noted that the economy remains too strong, especially in employment and manufacturing, for the central bank to consider cutting rates, which is usually something it does around when the Big Low sets in.

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