a man wearing glasses and looking at the camera: Shannon Stapleton/Reuters


© Shannon Stapleton/Reuters
Shannon Stapleton/Reuters

  • BlackRock CEO Larry Fink told CNBC on Tuesday stocks have more upside ahead and most investors should put more money to work in the market.
  • “I believe we still have more to go on the upside even in front of probably rising infection rates with COVID-19,” Fink said. 
  • With interest rates lower for longer and the likelihood of a second fiscal stimulus, Fink expects the market to move higher.

BlackRock CEO Larry Fink told CNBC on Tuesday that stocks have more upside ahead and investors should put more money to work in the market. 

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“We have a strong conviction that the average investor still is under-invested and they’re going to have to be putting more and more money to work over the coming months and maybe even years,” Fink said. “I believe we still have more to go on the upside even in front of probably rising infection rates with COVID-19.” 

The CEO of the world’s largest asset manager said that he’s not concerned about markets, citing the Federal Reserve’s plan to keep interest rates lower for longer, and saying he expects the US will see another fiscal stimulus “whether it occurs this month or in January.” He added that even as coronavirus infection rates rise, hospitalizations are falling. 

Read more: Good deals in pandemic-hit companies are proving hard to find. Here’s how big investors that raised billions to pounce on corporate distress are changing up their playbooks.

Another factor likely supporting the stock market’s climb upward is the record amount of retail participation, Fink said. He added that the coronavirus pandemic likely caused this surge in individual investing activity.

Fink told CNBC: “You report a lot about Robinhood and the day traders but across the board the average investor is putting more

The third-quarter reporting cycle is finally here. PACCAR Inc. PCAR is set to kick off the earnings season for the Auto-Tires-Trucks sector next week.

Per the Oct 9 Earnings Preview, the auto sector’s earnings tanked 123.5% on a 49.7% revenue slump during the second quarter. However, things seem to be gradually looking up for the sector. While earnings and revenues are expected to have declined in the September-end quarter as well, these declines are likely to be less severe. In the third quarter, overall earnings and revenues for the sector are projected to fall 35.1% and 4.8%, year over year.

Dismal Q2 Performance

The coronavirus outbreak hit the auto industry hard in the latter half of the first quarter and the second quarter. The pandemic hurt the industry significantly amid factory closures, low footfall at dealerships and supply-chain distortions. Depressed demand of vehicles amid waning consumer confidence has dented the margins of most automakers across the globe. Amid the coronavirus crisis-induced lockdown, with thousands of people working from homes, consumers had put off big-ticket purchases like cars, causing the global auto sales to plummet during the April-June period.

Per the S&P Global Market Intelligence analysis, U.S. auto sales plunged 33.3% year over year in the second quarter, with the overall non-seasonally adjusted U.S. vehicle sales for the period summing up to 2.95 million units, down from the 2019 figure of 4.42 million units. Notably, vehicle sales from each of the Detroit 3 carmakers — Ford, General Motors and Fiat Chrysler — dropped year over year during the June-end quarter.

U.S. Auto Industry Gathered Momentum in Q3

The pandemic has significantly transformed the auto industry. With social distancing becoming the new normal, people are avoiding public transportation, which makes private transportation the need of the hour. Remarkably, U.S. auto sales are

Application software firm Atlassian (TEAM) has performed extremely well over the last few years. The stock is up almost 145% over the last two years, while the S&P 500 is up a far more modest 21%. Even when compared to the iShares Expanded Tech-Software Sector ETF (IGV), Atlassian has gained twice as much as the sector.

Atlassian is getting ready to report fiscal first-quarter results in the next few weeks, and the stock is trading near an all-time high ahead of that earnings report. I wasn’t able to find the exact earnings date, as the company didn’t have the event on its Investor Relations page just yet. Several websites, including the Wall Street Journal, have the earnings report coming out on October 15. Based on the fact that Q4 2020 results were released on July 30 and third-quarter results were released on April 30, I am thinking the report will be in a few weeks, not on the 15th.

Regardless of when the report comes out, analysts expect the company to report EPS of $0.27 for the quarter, and that is a penny shy of the $0.28 Atlassian reported in Q1 last year. Revenue is expected to come in at $$440.49 million, and that is an increase of 25.2% compared to last year.

Over the last three years, the company has seen earnings grow by 52% per year, while revenue has grown by 38% per year. The fourth-quarter results showed earnings growth of 25% and revenue growth of 29%. Analysts expect the earnings growth to slow down in 2021 with an estimated growth rate of 3%. Revenue is expected to grow by 18.8%.

In addition to the tremendous earnings and revenue growth, Atlassian has strong management efficiency measurements. The return on equity is extremely high at 50.6%, and the

The U.S. Capitol building on Oct. 8.



Photo:

Stefani Reynolds/Bloomberg News

Tuesday

U.S. consumer prices are expected to rise in September for a fourth consecutive month following a sharp drop at the height of pandemic lockdowns. The Covid-19 recession has scrambled prices for an array of goods and services, but overall inflation pressures are expected to remain muted, allowing the Federal Reserve to keep its easy-money policies in place.

The International Monetary Fund releases forecasts for global economic growth that are expected to show a less-severe contraction in 2020 than initially anticipated. The latest outlook report comes as finance ministers and central bankers gather virtually for the IMF and World Bank’s annual meetings, which are often catalysts for global responses to crises but are unlikely to spark unified action against the Covid-19 recession this year.

Thursday

U.S. jobless claims have remained stubbornly high in recent weeks, a sign layoffs are still elevated even as the overall economy adds jobs. Figures for the week ended Oct. 10 are expected to show a slight decline in new applications for benefits from the previous week—though not nearly enough of a drop to change the picture of continued economic disruption.

European Union leaders meet in Brussels on Thursday and Friday to take stock of Brexit negotiations. The EU and U.K. face a Dec. 31 deadline to finalize terms for the breakup or face new barriers to trade and heightened economic disruption. The sides remain at odds on issues including appropriate levels of state aid, fishing rights and new U.K. legislation that appears to breach terms of a withdrawal agreement.

Friday

U.S. retail sales are expected to advance in September for a fifth consecutive month, underscoring a strong rebound in consumer spending on goods. Another month

Third-quarter earnings season kicks off this week in earnest with a plethora of major banks reporting results.

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While analysts have recently upgraded their expectations for earnings results across S&P 500 companies, most companies are still likely to report declines in profits over last year, with the effects of the coronavirus pandemic still lingering.

Q3 earnings season expectations

Second-quarter corporate earnings overwhelmingly topped a low bar of expectations, with Wall Street having braced for businesses to see activity hit a nadir during the worst of virus-related stay-in-place orders in late spring and early summer.

A record 84% of S&P 500 companies reported positive surprises for earnings per share (EPS) in the second quarter, even as EPS declined, in aggregate, by more than 30%, according to data from FactSet.

Those better-than-feared second-quarter results have also led analysts to deliver rare upward revisions to their estimates for third-quarter results – in turn leaving a potential for companies to disappoint against heightened expectations.

“The Q3 bottom-up EPS estimate (which is an aggregation of the median EPS estimates for Q3 for all the companies in the index and can be used as a proxy for the earnings for the index) increased by 4.1% (to $33.10 from $31.78) from June 30 to September 30,” FactSet’s John Butters said in a note on Friday. Six sectors recorded increases in estimates, including the consumer discretionary, energy, financials and materials sectors.

During the past five years, bottom-up EPS estimates had been revised down by an average 5.0%, Butters added. This marked the first time analysts raised their EPS estimates for S&P 500 companies during a quarter since the second quarter of 2018. Prior to 2018, S&P 500 EPS estimates hadn’t been raised since 2010.

But even with their upward revisions, analysts still expect that S&P 500 EPS