Last week, the US stock market once again closed at record highs as investors began to digest quarterly earnings reports and debates intensified over what action the Federal Reserve would take at the November meeting. Last week, the Nasdaq Composite Index, S&P 500 Index, and Dow Jones Industrial Average all rose by more than 1%, with the Dow and S&P 500 both closing at historic highs last Friday.

In the coming week, the highly anticipated US monthly retail sales report, known as 'terrifying data,' will lead the economic calendar as investors assess whether the economy will pick up momentum again after the unexpectedly strong job report in September. In terms of corporate news, $Bank of America (BAC.US)$Please use your Futubull account to access the feature.$Goldman Sachs (GS.US)$ and $Morgan Stanley (MS.US)$ Major banks are set to announce their financial reports, while $United Airlines (UAL.US)$and $Netflix (NFLX.US)$ 's report will also be a focal point of this week.

Expectations for the Fed not to cut rates in November are strengthening.

Over the past week, speculation about the Fed not further reducing interest rates at the November meeting has been growing. The September non-farm payrolls report helped alleviate concerns about a rapid deterioration in the job market. The September non-farm payrolls report showed another decrease in the unemployment rate, with monthly job additions reaching one of the highest levels this year. The latest monthly CPI report released last Thursday showed a higher-than-expected increase in core prices. The Producer Price Index (PPI) released last Friday also showed a similar situation, with core prices rising by 2.8%, exceeding Wall Street's expectation of 2.6%.

Some believe that considering these data points and the latest Fed meeting minutes from September indicating that 'some' officials may support a slight rate cut, the Fed may keep rates unchanged in November.

According to CME's FedWatch Tool data, as of last Friday, the market estimated an 18% chance that the Fed would not cut rates in November, up from 3% a week ago.

Yardeni Research's Chief Market Strategist Eric Wallerstein said: "As long as the inflation rate does not approach 2% so sharply, and there is no crisis in the labor market (I did not foresee this), I believe the Fed has no reason to further cut interest rates this year."

Retail Sales Data

Stronger than expected economic data helped drive the discussion of "no rate cuts". Investors will see another indicator of the US economic condition this week, the September retail sales report released on Thursday. Economists expect a 0.2% increase in retail sales in September compared to the previous month; an increase of 0.1% in August, breaking the downward trend predicted by economists.

Jefferies Financial's economic team, led by Thomas Simons, wrote in a report to clients last Friday: "Retail sales may particularly become a significant factor affecting the market, as the divergence of this data has widened, and scrutiny of consumer health has intensified. We caution that people should not read too deeply into forecasts that are contrary to consensus (up or down), as retail sales measure spending heavily, mainly on goods rather than services, and are measured at nominal prices. Weakness may be due to sustained anti-inflation or deflation in goods."

Corporate earnings

Large banks have essentially passed Wall Street's earnings season test, with the announced performance of major banks - JPMorgan Chase (JPM.US) and Wells Fargo & Co. (WFC.US) - satisfying the market. At the beginning of this week, investors will continue to focus on financial sector stocks, as Morgan Stanley, Goldman Sachs, and Bank of America will report earnings, with attention shifting to Netflix's earnings after Thursday's market close.

The stock price of this streaming giant has risen by about 50% this year, nearing historic highs. Wall Street expects Netflix to report earnings of $5.16 per share and revenue of $9.77 billion; this means earnings have increased by nearly 40% compared to the previous year.

But Wall Street is fiercely debating whether the stock can maintain its significant upward momentum. In the short term, Citigroup analyst Jason Bazinet believes that Netflix's announcement of further price hikes in the USA could act as a catalyst for the stock. Bazinet wrote, "We expect Netflix's stock price to rise after the price hike announcement in the USA, but we anticipate that as investors' expectations of $25 EPS in 2025 are shattered, Netflix's stock price will eventually decline."

Issue of rising U.S. bond yields.

The 10-year U.S. Treasury bond yield has been hovering around 4.1% for the first time since the end of July. Over the past week, the 10-year U.S. Treasury bond yield has risen by about 30 basis points, as there are signs that inflation may be more challenging than initially thought, while economic growth data remains steady, leading investors to lower their expectations of rate cuts.

For most of the past few years, high yields have been a headwind for the stock market. However, Piper Sandler's Chief Investment Strategist Michael Kantrowitz stated last Thursday that yields may not have risen to the point of being too much of a headwind. Kantrowitz said, "I don't think rising rates are that concerning for the overall stock market. But it is indeed a major factor."

Kantrowitz pointed out that real estate and small cap stocks.$Russell 2000 Index (.RUT.US)$benefit from investors' expectations of interest rate cuts in sectors such as these, but have lagged behind during the recent 10-year period of rising US Treasury yields. Kantrowitz added that the current rise in interest rates is determining leading sectors in the market, and exerting a drag effect on indices other than the S&P 500. He said, "If rates continue to rise, I don't think this is a big problem for the stock market unless it persists for several months."

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