NEW YORK: US stocks could struggle to stay close to nearly five-year highs this week as worries mount about third-quarter earnings and the market appears primed for a pullback from recent stimulus-driven gains.
A bevy of economic reports, including durable goods orders, will grab attention, particularly after the Federal Reserve unveiled its plan on Sept. 13 for a third round of aggressive stimulus to help revive the flagging US economy.
While the action ignited a rally in stocks, analysts have worried that it may suggest the US economy is in worse shape than many had feared.
To be sure, stocks are at lofty levels and are likely to attract investors hoping the market will ride out the year on a positive note. The Dow Jones Industrial Average and the benchmark Standard & Poor's 500 index remain close to highs not seen since December 2007. The S&P 500 is up 16.1 percent since the end of 2011.
"I think the market certainly is ripe for a pullback. But whatever the pullback, it's going to be rather shallow," said Peter Cardillo, chief market economist at Rockwell Global Capital, in New York.
"Any disappointment in key economic data that would reverse the market's feeling the economy has stabilized, I think could trigger a 2 to 4 percent pullback," he added.
Some of that move was seen last week in stocks. The S&P 500 slipped 0.4 percent for the week. The Dow industrials and the Nasdaq each finished the week down 0.1 percent.
Besides August durable goods orders, data on personal income and spending is due this week, as well as new home sales and the final read on US gross domestic product for the second quarter.
Housing data has been surprisingly strong in recent months and homebuilder shares have experienced massive gains. The PHLX housing sector index is up 62.3 percent since Dec. 31. But that strength has been offset by worrisome data on US manufacturing, which had been among the economy's strongest sectors. The stubbornly high US unemployment rate also has kept a damper on Wall Street's mood.
Profit warnings from such high-profile US companies as FedEx helped cement the view last week that third-quarter results could be a drag on the market.
"We've had some pretty negative pre-announcements, and those announcements for this time frame have been a little more than we've had in the past," Cardillo said.
Estimates for S&P 500 companies' third-quarter profits have fallen sharply in recent months, and earnings now are expected to drop 2.2 percent from a year ago, according to Thomson Reuters data. It would be the first such decline in three years.
Outlooks for the third quarter are at the most negative since the third quarter of 2001, the data also showed. The negative-to-positive ratio for the upcoming earnings period stands at 4.3 to 1.
Third-quarter earnings are not expected to start in earnest until after the second week of October, when Alcoa is expected to kick off the reporting period.
"What I'm worried about is what I don't know," said Doug Cote, chief market strategist at ING Investment Management, in New York.
That includes negative surprises on earnings, he said, as well as the chance that China's economy may be slowing faster than economists previously thought.
"The aggressiveness of the (Fed's) quantitative easing has caused me alarm," Cote said.
The Fed's recent action followed a decision by the European Central Bank to support debt-ridden euro-zone nations by purchasing their debt.
Speculation on Friday that Spain was moving toward a bailout request gave investors some relief. The debt-laden country, which is likely to stay in focus next week, said it was considering freezing pensions and speeding up a planned rise in the retirement age as it raced to cut spending and meet conditions of an expected international sovereign aid package.
Both central bank moves are expected to provide a floor for the market, possibly through year end, analysts said.
"Financial markets will benefit more than the economy," said Fred Dickson, chief market strategist at D.A. Davidson & Co., in Lake Oswego, Oregon.
With the Fed's decision out of the way, investors are also likely to turn their attention to other issues, including November's US presidential election, he said, and looming decisions about US fiscal policy.
Wall Street: Stocks face earnings and data hurdles
Wall Street: Stocks face earnings and data hurdles
Saudi Arabia leads outcome-based education to prepare future-ready generations: Harvard Business Review
- The Riyadh-based school group developed a strategy that links every classroom activity to measurable student competencies, aiming to graduate learners equipped for the digital economy and real-world contexts
RIYADH: Saudi Arabia’s education system is undergoing a sweeping transformation aligned with Vision 2030, shifting from traditional, input-focused methods to outcome-based education designed to equip students with future-ready skills, Harvard Business Review Arabic reported.
The transformation is being adopted and spearheaded by institutions such as Al-Nobala Private Schools, which introduced the Kingdom’s first national “learning outcomes framework,” aimed at preparing a generation of leaders and innovators for an AI-driven future, the report said.
Al-Nobala has leveraged international expertise to localize advanced learning methodologies.
The Riyadh-based school group developed a strategy that links every classroom activity to measurable student competencies, aiming to graduate learners equipped for the digital economy and real-world contexts. The school’s group approach combines traditional values with 21st-century skills such as critical thinking, communication, innovation and digital fluency.
According to the report, the shift addresses the growing gap between outdated models built for low-tech, resource-constrained environments and today’s dynamic world, where learners must navigate real-time information, virtual platforms, and smart technologies.
“This is not just about teaching content, it’s about creating impact,” the report noted, citing how Al-Nobala’s model prepares students to thrive in an AI-driven world while aligning with national priorities.
The report noted that Saudi Arabia’s Ministry of Education has paved the way for this shift by transitioning from a centralized controller to a strategic enabler, allowing schools such as Al-Nobala to tailor their curriculum to meet evolving market and societal needs. This is part of the long-term goal to place the Kingdom among the top 20 global education systems.
Al-Nobala’s work, the report stated, has succeeded in serving the broader national effort to link education outcomes directly to labor market demands, helping to fulfill the Vision 2030 pillar of building a vibrant society with a thriving economy driven by knowledge and innovation.
Last February, Yousef bin Abdullah Al-Benyan, Saudi Arabia’s minister of education, said that the Kingdom was making “an unprecedented investment in education,” with spending aligned to the needs of growth and development. He said that in 2025, education received the second-largest share of the state budget, totaling $53.5 billion.
