Dow Jones, Nasdaq, S&P 500 preview: Markets brace for CPI, Q3 earnings kick-off

Investing.com -- U.S. stocks rose Friday, led by technology shares, as investors looked to rebound from a volatile week marked by elevated Treasury yields and oil prices and declines in the AI trade.

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The Nasdaq Composite gained 0.64% to 27,366.17. The S&P 500 rose 0.59% to 7,811.54, and the Dow Jones Industrial Average added 423.31 points, or 0.83%, to close at 51,654.95.

Stocks hit session highs after President Donald Trump said Russian President Vladimir Putin agreed to supply diesel to the U.S. and global markets. Oil prices, which ended slightly higher, with West Texas Intermediate near $92 a barrel and Brent above $104, dipped modestly after the announcement.

This week, inflation data, other economic reports and bank earnings will give investors a read on corporate profits and the path of interest rates, the two major factors driving the market.

Wednesday's September consumer price index is among the last major data releases before the Fed meets Oct. 27-28 to decide whether to raise rates again. A Reuters poll expects annual inflation of 3.7%, with core inflation, which excludes food and energy, at 2.5%. The Fed targets 2%.

Reports on producer prices and retail sales will give further insights into the economy. Traders have scaled back bets on another Fed hike this month, but data showing a hotter economy could revive them.

"The September CPI will test whether inflation gives the Committee room to wait. For now, Fed speakers are emphasizing flexibility, the minutes reveal a downside surprise on core PCE, and markets remainskeptical of an October move," UBS economists said in a note.

"We continue to expect one more hike, with a risk of another, but this doesn't seem like a Committee in a rush," they added.

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The Fed's decision last month to raise rates, its first hike since 2023, has been one factor pushing up Treasury yields. The 10-year yield was around 5.24% late Friday, after recently touching its highest level in 24 years.

The third-quarter earnings season also kicks off this week. JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo are due to report Tuesday, with Morgan Stanley and Bank of America following Wednesday, completing results from the six largest banks. Banks traditionally open earnings season, and their reports offer a window into the health of the broader economy.

Overall, S&P 500 earnings are expected to have jumped more than 30% in the third quarter after a robust first half, according to LSEG data.

Johnson & Johnson, UnitedHealth Group and BlackRock will also report this week.

JPMorgan: "Q3 reporting season is about to start. Given the increased volatility in the past weeks on a number of fronts, a lot is at stake. We find that investors in general have a constructive view on earnings, but are concerned that actual results might underwhelm. We believe that earnings will be a support for the market."

Evercore ISI: "Focus directed intently on Financials at first. Recent underperformance has pushed XLF to the critical 200 DMA – raising the potential for EPS surprises and guidance to catalyze stocks, up or down. There will be volatility as investors hang on every word from the Big Banks this week."

"Long term, the Bull Market remains intact."

Goldman Sachs: "The shifting balance of corporate supply and demand adds pressure on equity valuations, but we do not expect increasing equity supply to derail the bull market. Strong demand from households and foreign investors totaled more than $1 trillion in H1 2026, and our outlook for continued economic and earnings growth alongside declining interest rates should support continued investor demand for equities in 2027."

RBC Capital Markets: "Though the U.S. equity market has been resilient in recent trading, we continue to believe that a tier 1/garden variety pullback of 5-10% in the S&P 500 in the near term (coming weeks/months) is overdue. Risk of a tier 2 / growth-scare pullback of 14-20% has also moved up, but is not our base case."

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