NEW YORK, Oct 10 (Reuters) – With the U.S. federal government shutdown disrupting the release of key economic indicators, investors are turning to upcoming quarterly financial reports from major banks for insights into the nation’s economic condition. The absence of timely government data has created a fog around current economic trends, making corporate earnings a critical barometer in the near term.
Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments, noted that markets had become overextended and were overdue for fluctuations. “Ultimately, everything ties back to the underlying economy,” Miskin remarked. “Corporate profitability remains central, and with earnings season approaching, it will play a pivotal role in shaping market direction.”
The S&P 500 has gained more than 11% so far this year and sits within 3% of its historical peak, despite a sharp drop on Friday. Valuations across equities are near five-year highs, raising concerns about whether investor optimism—particularly around technology and artificial intelligence—is overly exuberant. A robust third-quarter earnings cycle will be essential to sustain bullish momentum.
Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions, observed that the market’s steady climb has been supported by improving profit expectations. “Fundamental indicators still appear solid,” he said. “The foundation for continued gains lies in corporate performance.”
Beyond equities, other assets such as gold, silver, and bitcoin have also posted notable advances recently. High-profile figures including International Monetary Fund head Kristalina Georgieva and JPMorgan CEO Jamie Dimon have voiced caution about potential market imbalances.
Recent labor statistics have pointed to softening demand, prompting the Federal Reserve to resume cutting interest rates. Analysts view bank results as a vital lens into consumer behavior and credit demand. Irene Tunkel, chief U.S. equity strategist at BCA Research, explained: “Banks offer a real-time view of economic activity. If spending holds up and loan applications increase, it suggests the economy may avoid a downturn.”
Chuck Carlson, CEO of Horizon Investment Services, warned that any signs of weakening in projected earnings could unsettle broader market sentiment. “Much of the current optimism hinges on anticipated profit growth,” he said. “If those expectations falter, the consequences could ripple across asset classes.”
Market participants are also monitoring political developments in Washington, where a budget standoff between Republicans and Democrats has led to a partial government closure since October 1. While markets have so far absorbed the disruption, prolonged inaction risks amplifying economic headwinds, particularly in sectors like travel.
The shutdown has already delayed the monthly jobs report, originally due October 3. Additional data releases, including inflation and retail sales figures, may also be affected. The Consumer Price Index is now scheduled for October 24, according to the Bureau of Labor Statistics, though no other reports will be issued until government operations normalize.
Michael Pearce, deputy chief U.S. economist at Oxford Economics, cautioned that extended delays would complicate the interpretation of future data. “With regular economic metrics on hold,” he wrote, “the information gap is widening.”
— news from Reuters
— News Original —
Wall St Week Ahead Investors seek economic clues from bank earnings amid data fog
NEW YORK, Oct 10 (Reuters) – Investors will look to major banks ‘ quarterly earnings reports in the coming week to help gauge the U.S. economy ‘s health as the federal government shutdown has interrupted the flow of new data. n nSign up here. n nMarkets had been overbought and due for some volatility, said Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments. n n”At the end of the day, it ‘s going to come back to the economy,” Miskin said. “It ‘s going to come back to corporate profits, and earnings season is right around the corner.” n nWith the U.S. stock market ‘s valuation around its highest level in five years and some concerns about over-inflated investor enthusiasm for technology and artificial intelligence, a strong third-quarter earnings season will be critical for equities to maintain their momentum. Despite Friday ‘s sharp decline, the S&P 500 remains up over 11% year-to-date and within roughly 3% of its all-time high. n n”The market just keeps grinding higher,” said Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions. “The key underpinning of that is stronger earnings outlooks. … When you look at the fundamentals, things continue to look good.” n nThe record-breaking run for U.S. stock indexes has been accompanied by recent strong gains for other assets, including gold, silver and bitcoin. Several high-profile officials have recently made cautious comments about markets, including Kristalina Georgieva, head of the International Monetary Fund, and JPMorgan CEO Jamie Dimon. n nRecent weak labor market data has raised concerns about growth and prompted the Federal Reserve to restart interest rate cuts. n n”Banks are a window into the U.S. economy,” said Irene Tunkel, chief U.S. equity strategist at BCA Research. “If we see that consumers are still spending, if we see that demand for loans is improving, then I will start to think that perhaps we ‘re not really edging towards contraction.” n n”A lot of the bullishness is built around the expected earnings growth,” said Chuck Carlson, chief executive officer at Horizon Investment Services. “If we start to see cracks in that, that would not be good for the market in general.” n nAttention also will be on Washington to see if Republican and Democratic lawmakers break an impasse and end a government shutdown that began on October 1. Markets have largely shrugged off the shutdown so far, but investors have warned that risks to the economy will increase the longer it goes on, while it is already hamstringing U.S. travel. n nAnother issue for investors is the interrupted publication of key economic reports by government agencies. The monthly employment report, due on October 3, already has been delayed. n nInvestors have been concerned that the shutdown also could affect next week ‘s data, including releases related to inflation and retail sales. n nThe monthly consumer price index report, which is closely watched for inflation trends, will be published on October 24, the U.S. Bureau of Labor Statistics said on Friday, after the CPI report was originally scheduled for this coming Wednesday. n nWhile the CPI report will allow the Social Security Administration to meet deadlines necessary for payment of benefits, the BLS said no other releases will be rescheduled or produced until regular government services resume. n nIf the shutdown drags on through next week, there will be an impact on the October employment report when it is released, “which would make the numbers harder to interpret,” Michael Pearce, deputy chief U.S. economist at Oxford Economics, said in a note on Friday. n n”With much of the regular economic data unavailable during the shutdown,” Pearce wrote, “the data fog is thickening.” n nReporting by Lewis Krauskopf; Editing by Alden Bentley, Richard Chang and Aurora Ellis