Corporate earnings and Federal Reserve expectations will provide the key catalysts next week. Some of the world's largest companies are set to announce their quarterly results, events which could stir significant swings among sector-based exchange traded funds tied to those potentially market-moving reports.
Meanwhile, traders will continue to fine-tune their projections of what the Fed will do after its November meeting. With a 75-basis-point hike baked in for the Nov. 2 policy decision, investors are already looking forward to December’s meeting, where odds are currently close to even between a 50-basis-point hike or another 75-basis-point increase.
Based on Friday's trading, Wall Street has priced in a slight edge towards a 50-basis-point hike in December, with the odds sitting at about 52%. This compares to the 45% likelihood that another 75-basis-point move is on tap. The changing dynamics around those probabilities will move ETFs related to the Treasury market.
Elsewhere, oil earnings and housing data could also create volatility in various ETFs. Here are some ETFs to watch out for based on some of next week's likely catalysts:
Next week will see a deluge of earnings reports, including updates from some of the world's largest companies. This includes Apple (AAPL), Microsoft (MSFT), Meta (META), Amazon (AMZN) and Google (GOOG) (GOOGL).
Focusing on AAPL, the iPhone maker appears in more than 400 exchange traded funds, with the broad index-tracking fund SPY (SPY) its largest holder among ETFs, according to ETF.com.
The biggest allocation comes from the Technology Select Sector SPDR Fund (NYSEARCA:XLK), which has a nearly 24% weighting towards the tech giant. That ETF also has a 23% weighting towards MSFT, opening up the possibility of significant volatility as the two megacaps prepare their quarterly reports.
Treasury Yields Remain in Focus
Treasury yields will stay on traders' radars next week, as the Federal Reserve's Nov. 2 meeting comes closer. Yields dipped on Friday but only after pushing sharply higher for the past couple of weeks, forcing the price of Treasury bond funds lower.
The U.S. 2-year and 10-year Treasury yields (US2Y) (US10Y) both touched highs last week not seen since 2007. Much will depend on perception of the Fed's medium-to-longer term plans, which have been in flux lately.
Big Oil Reports Results
XOM is found in 291 ETFs while CVX sits inside of 274 funds. Some of the largest holders that may be primed for price action based on the results, including (NYSEARCA:XLE), (FENY), (DRLL), (VDE), (IYE), and (ERX).
More Housing Data on Tap
The housing market has seen a long string of disappointing results lately, pointing to flagging demand in the face of higher interest rates. More readings about the sector are due out next week, with Wall Street set to receive August’s Case Shiller Y/Y figures on Tuesday and Y/Y House Price Index data as well.