A flood of earnings, U.S. economic growth and some Fed speakers are set to hit markets in the coming week, and could help add confidence to a picture of moderate growth and an end to the earnings recession.
About a third of companies are scheduled to report next week, including Apple on Tuesday. Amazon.com and Google's parent Alphabet are set to post quarterly results on Thursday, the busiest day of the earnings season.
"If nothing changes … we would say we came out of the earnings recession this quarter and that the second quarter was the final quarter of this earnings recession," said Sam Stovall, chief investment strategist at CFRA.
Financials, materials and technology are expected to show the most earnings per share growth this quarter, Stovall said, while energy industrials and telecom are forecast to be the laggards.
In the past week, financials were among the top performers after the major bank earnings topped expectations. The S&P 500 gained about 8 points for the week to end at 2,141 Friday.
Next week, "I think really the big focus is going to be on earnings," said Casey Clark, vice president of investment strategy at Glenmede. "I think we're in a situation where investors are focusing on earnings and traditional drivers of equity markets. Part of that is there's more comfort on global central bank policy."
A UBS study in October showed that over the last five years, the S&P 500 moves more in sync with earnings per share than the level of interest rates. The correlation between stocks and earnings was very high, almost 90 percent, vs. less than 40 percent correlation between stocks and interest rates.
Correlation of S&P 500 vs. interest rates and EPS, last five years, in %
Source: UBS, as of October 20, 2016.
The average year-end S&P 500 target is 2,198, according to CNBC's Market Strategist Survey conducted in October. But strategists are watching whether earnings growth will sustain further gains in the market.
"Next year's earnings look too high, and that might mean the market is a tad more expensive than it looks, but it's helpful that the third-quarter earnings [are beating so far]," said Brian Nick, chief investment strategist at TIAA Global Asset Management, which has about $915 billion in assets under management.
"We're still making our way out of this period where energy earnings look weak compared to where they were one year ago," Nick said.
Most analysts expect the Federal Reserve to raise rates at its December meeting, but will watch data ahead of the central bank's meeting on Nov. 1 and 2. The Markit manufacturing and services PMI are scheduled for release next Monday and Wednesday, respectively.
Three Fed speakers are set to speak Monday ahead of the blackout period heading into the Fed's meeting Nov. 1 and 2.
St. Louis Fed President James Bullard speaks on the U.S. economy and monetary policy Monday morning, while Chicago Fed President Charles Evans is set to speak on current economic conditions and monetary policy in the afternoon. Fed Governor Jerome Powell is scheduled to speak later in the day on the future of Treasury market settlement.
The first read on U.S. gross domestic product is due next Friday, and the consensus estimate from Reuters is 2.5 percent. The final read on second-quarter GDP showed an annual rate of 1.4 percent growth.
A print between 1.5 percent and 3 percent is "probably a number consistent with the Fed passing in November but hiking in December," said John Canally, chief economic strategist at LPL Financial.
Other data scheduled for release next week include the Markit manufacturing and services PMI, the employment cost index, consumer sentiment and pending home sales.
Overseas, the preliminary estimate on third-quarter U.K. GDP is due for release Thursday, the first full-quarter GDP data since the surprise U.K. vote to leave the European Union.
"Brexit negotiations [are] always on slow boil every week and next week is no different," Canally said. "A very weak number on the U.K.[GDP] may weaken Prime Minister May's hand temporarily."
European Central Bank President Mario Draghi is scheduled to speak Tuesday in Berlin on "Stability, Equity and Monetary Policy."
Week Ahead
Monday
Earnings:
BTB: Kimberly-Clark, Restaurant Brands, T-Mobile
ATB: Visa, Zions Bancorp, Sonic
9:05 a.m.: St. Louis Fed President James Bullard speaks on the U.S. economy and monetary policy
9:45 a.m.: Markit manufacturing PMI
1:30 p.m.: Chicago Fed President Charles Evans discusses current economic conditions and monetary policy
2 p.m.: Federal Reserve Governor Jerome Powell speaks on the future of Treasury market settlement
Tuesday
Earnings:
BTB: 3M, Caterpillar, DuPont, Eli Lilly, Fiat Chrysler, General Motors, Merck, Novartis, Procter & Gamble, United Technologies, Corning, Freeport-McMoRan, KeyCorp, KKR, Lockheed Martin, Pentair, Sherwin-Williams, Sprint, TD Ameritrade, Under Armour, Valero Energy, Whirlpool, AK Steel, II-VI, Janus, JetBlue, Spirit Airlines, TransUnion
ATB: Apple, AT&T, Chipotle Mexican Grill, Capital One, Discover Financial, Express Scripts, Juniper Networks, Vertex Pharma, iRobot, Pandora Media, Panera Bread, Owens-Illinois
9 a.m.: Case-Shiller Home Price Index
9 a.m.: FHFA Home Price Index
10 a.m.: Consumer confidence
10 a.m.: Richmond Fed Survey
1 p.m.: $26 billion two-year Treasury note auction
1:20 p.m.: Atlanta Fed President Dennis Lockhart speaks on lending and investing in community development
Wednesday
Earnings:
BTB: Biogen, Boeing, Coca-Cola, Comcast, GlaxoSmithKline, Mondelez International, Nintendo, Simon Property Group, Boston Scientific, Canon, General Dynamics, Hess, Nasdaq OMX, Norfolk Southern, Northrop Grumman, Southwest Air, State Street, Syndham Worldwide, Alliance Bernstein, Garmin, Generac, GrubHub, Owens Corning, Six Flags
ATB: Samsung Electronics, Tesla Motors, Texas Instruments, F5 Networks, Arch Capital, Murphy Oil, Newmont Mining, NXP Semiconductor, Public Storage, Suncor, VMWare, Western Digital, Whiting Petroleum, Buffalo Wild Wings, Cheesecake Factory, Extra Space Storage, Groupon, Rent-a-Center, Shutterfly, Raymond James
8:30 a.m.: U.S. trade deficit
9:45 a.m.: Markit services PMI
10 a.m.: New home sales
1 p.m.: $34 billion five-year Treasury note auction
Thursday
Earnings:
BTB: Barclays, Bristol-Myers Squibb, Celgene, Colgate-Palmolive, ConocoPhillips, Deutsche Bank, Dow Chemical, Ford, UPS, Volkswagen, Aetna, Alexion Pharma, Autoliv, Blackstone, Borg Warner, CBRE Group, CME Group, Dr. Pepper Snapple, Gannett, International Paper, Invesco, L-3 Communications, Marathon Petroleum, National Oilwell Varco, Nokia, Nomura Holdings, Potash, Praxair, Raytheon, Sirius XM Radio, Stanley Black & Decker, T. Rowe Price, Thermo Fisher, Brunswick, Cabela's, Cliffs Natural Resources, GNC Holdings, Lazard, Old Dominion Freight Line, Pinnacle Foods, Sealed Air
ATB: Alphabet, Amazon.com, Baidu, Amgen, Deckers Outdoor, Aflac, Digital Realty Trust, Cirrus Logic, Columbia Sportswear, Cypress Semiconductor, Eldorado Gold, Flex, Fortinet, Federated Investors, VeriSign, Yamana Gold
8:30 a.m.: Jobless claims
8:30 a.m.: Durable goods
10 a.m.: Pending home sales
10 a.m.: Housing vacancies
11 a.m.: Kansas City Fed Survey
1 p.m.: $28 billion seven-year Treasury note auction
Friday
Earnings: Chevron, Exxon Mobil, A-B InBev, MasterCard, AbbVie, UBS, Ambev, BNP Paribas, Sanofi, AutoNation, Cabot Oil & Gas, Hershey, Phillips 66, Shire, Weyerhaeuser, Xerox, Apollo Global Management, Bloomin' Brands, CBOE Holdings, Legg Mason, Oaktree Capital, Tenneco
8:30 a.m.: Q3 GDP, advance
8:30 a.m.: Employment cost index
10 a.m.: Consumer sentiment
*All times Eastern. Planner subject to change.