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Investing.com -- The risk-off mood dominating markets looks likely to continue in the coming week, while four out of seven megacap companies are due to report earnings. U.S. data will give markets another update on the strength of the economy. Oil prices look set to remain choppy and the European Central Bank will announce its latest rate decision. Here’s what you need to know to start your week.
Risk-off mood
A risk-off mood is dominating markets with investors worried about the prospect of more interest rate hikes and the Israel-Hamas conflict spreading. A weaker-than-expected earnings report for Tesla (NASDAQ:TSLA) last week also darkened the mood.
Wall Street’s most closely watched measure of investor nervousness, the CBOE Volatility Index, closed Friday at its highest in nearly seven months. For the week the Dow was down 1.6%, the S&P 500 fell 2.4% and the Nasdaq slid 3.2%.
The benchmark 10-year Treasury yield eased on Friday, a day after crossing 5% for the first time since July 2007 in the wake of comments by Fed Chair Jerome Powell (see below).
That has left investors piling into other traditional safe-haven assets such as the dollar and gold, as well as short-term Treasuries or money-market funds, which are providing more attractive returns since interest rates began rising early last year.
Megacap earnings
Third quarter earnings season is well underway and results from four megacap companies are due this week, in what will be a key test for a group of stocks whose gains have propelled the S&P 500 higher this year.
Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) are due to report on Tuesday, Meta Platforms (NASDAQ:META) is to report on Wednesday and Amazon (NASDAQ:AMZN) reports on Thursday.
Those stocks, together with Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA) and Tesla have accounted for the bulk of the S&P 500's 10% year-to-date gain, so any disappointing results could result in widespread fallout.
Other big names reporting in the coming week include Coca-Cola (NYSE:KO), General Motors (NYSE:GM), Merck (NYSE:MRK) and United Parcel Service (NYSE:UPS). Investors are banking on an overall recovery in U.S. profits after a tepid first half.
U.S. data
Market watchers will get a fresh update on the strength of the U.S. economy this week from data including third-quarter growth and the Fed’s favored measure of inflation, the core personal consumer expenditures price index.
Economists are expecting third quarter gross domestic product to come in at an annualized rate of 4.1%, boosted by strong consumer spending.
