Inflation Data

Price pressures continued to decrease at the close of the third quarter, according to Thursday's inflation figures for September. The information, which follows Friday's strong employment report, will probably influence projections for the number and rate of rate reductions by the Federal Reserve in the upcoming months.

It is anticipated that statistics on producer price inflation on Friday will likewise indicate lower inflation.

The Fed will probably be comforted by the report that inflation is returning to a sustainable level and will likely hit its 2% objective.

The Fed began its easing cycle last month with a sizable rate decrease of 50 basis points, and the employment data released on Friday makes it unlikely that the central bank will make another sizable cut in November.

Earnings Season Begins

The US market is ready to enter the third quarter results season, which will be a test for a stock market that is close to record highs and trading at exorbitant valuations.

On Friday, major financial institutions report, including JPMorgan, Wells Fargo, and BlackRock.

The strength of the loan demand is one of the many insights that bank results provide into the economy. Moreover, investors will be watching for indications that the economy is already being impacted by the Fed's significant rate cut from last month, such as an increase in vehicle sales or the purchase of other expensive goods.

Investors that are bullish are hopeful that the stock market's rising values will be justified by the performance. Despite recent volatility brought on by escalating geopolitical tensions in the Middle East, the S&P 500 is up 20% for the year and trading close to new highs.

Fed Minutes

Investors will be watching the Fed's September meeting minutes for clues on how policymakers may be considering the rate of easing moving ahead when they release them on Wednesday.

It would be helpful to have more information on the issues that contributed to policymakers coming to an agreement on the 50bps drop.

Over the week, investors will also have the opportunity to hear from a number of Fed representatives, including Lorie Logan, Adriana Kugler, Raphael Bostic, and Neel Kashkari.

In the meantime, the recent weather interruptions are probably going to have an effect on Thursday's data on initial unemployment claims.

Crude Oil

Due to the growing risk of a regional conflict in the Middle East, oil prices increased on Friday and ended the week with their largest weekly gains in more than a year. However, these gains were short-lived as Biden dissuaded Israel from attacking Iranian oil installations.

Israel has vowed to attack Iran for firing a flurry of missiles toward Israel on Tuesday following Israel's killing of Hezbollah's leader, which Iran supports. Oil analysts alerted customers to the possible consequences of a wider conflict in the Middle East as a result of the events.

Iran produces about 3.2 million barrels per day, or 3% of the world's supply, and is a member of OPEC+. If Iranian supplies are affected, other group members should be able to increase output due to spare production capacity, which should limit rises in oil prices.

(Sources: investing.com, reuters.com)