Major indexes enjoyed a rebound Monday with signs of technical buying in what some analysts called oversold conditions. This lifted the S&P 500® Index (SPX) after it fell 10% from the late-July peak, meeting Wall Street’s definition of a market “correction.” In what could bode well for today’s trading, stocks closed near their highs yesterday. However, Monday’s volume was lower than average, suggesting  a lack of firm conviction behind the rally. Major indexes generally climbed overnight in premarket trading.

Wall Street is pushing through a thicket of data and earnings, including the Federal Reserve’s meeting that begins today and concludes at 2 p.m. ET Wednesday. Apple (NASDAQ:AAPL) reports earnings after the close on Thursday, and Friday brings the monthly Nonfarm Payrolls report. Consensus from analysts is for around 170,000 new jobs in October.

• In addition, the Bank of Japan (BoJ) left interest rates unchanged but announced further tweaks to its yield-curve control policy that might help lift yields there as Japan deals with rising inflation for the first time in decades. This adjustment—the third since last December—is generally seen as bearish for U.S. Treasuries because it could make Japanese bonds more attractive to investors there, weakening demand for U.S. Treasury notes.
• China’s manufacturing surprisingly contracted in October, according to the official NBS Manufacturing Purchasing Managers’ Index (PMI) report released earlier today. It came in at 49.5, versus analyst expectations for 50.2 and down from 50.2 in September. A reading of 50 or more indicates expansion. If softness continues, it might lead to additional economic stimulus from Beijing.
• Heading west from China, inflation in the Eurozone eased while the area’s economy shrank 0.1% in Q3, down from market forecasts for a flat reading, according to Trading Economics. European shares rose overnight but, like U.S. shares, are on pace for a monthly loss. However, the easing inflation reading could lead to ideas that the European Central Bank (ECB) might be done with rate hikes. “At the same time, economic data in the region have been much weaker than in the U.S., so it’s an example of how disinflation in and of itself is not always a “good” economic signal in terms of demand,” says Schwab’s Gordon.
• From a headline perspective, the U.S. Q3 Employment cost index out this morning looked benign. It rose 1.1% versus the Briefing.com consensus of 1%. It appears the rebound was driven by wages and salaries, which reaccelerated from 1% in Q2 to 1.2% in Q3, driven by firm growth in government salaries.
• Just before the open loom the FHFA House Price Index and S&P CoreLogic CS Home Price Index, important updates on the U.S. housing market. Consensus is for a slight rise in home prices of about 0.3% in August, according to Briefing.com.

The data keep coming even when U.S. trading begins, as investors prepare for Chicago PMI and U.S. October Consumer Confidence. Analysts expect that report to hit the century mark, at 100 exactly for a headline figure, according to Briefing.com. That would be down from 103 in September. Expectations is the sub-category to watch in the report, as it fell sharply in September amid worsening sentiment around future business conditions and job availability.

Key earnings to watch later this week, other than Apple, include DuPont (NYSE:DD), Humana (NYSE:HUM), Kraft Heinz (NASDAQ:KHC), Starbucks (NASDAQ:SBUX), Qualcomm (NASDAQ:QCOM), and Roku (NASDAQ:ROKU). Unlike some weeks where one or two industries dominate, this week features a little of everything, so it’s important to take things one company at a time. EPS overall is outpacing analysts’ estimates, but revenue growth has been far slower than expected. Still, FactSet expects S&P 500 EPS to grow for the first time in a year, and we’re about halfway through the season.

Advanced Micro Devices chips in this afternoon following semiconductor earnings from Texas Instruments (NASDAQ:TXN) and Intel (NASDAQ:INTC) last week. Intel’s results raised positive sentiment in the slumping sector, but Texas Instruments saw shares decline on what some analysts called a cautious revenue forecast. Texas Instruments told analysts that “industrial weakness broadened” recently. This suggests softness in the industrial part of the economy continues.

Extended pause: If the Fed keeps interest rates on pause Wednesday for the second straight meeting, it would be the first time since the period of late 2021–early 2022 that it’s done so back-to-back. The FOMC last raised rates one-quarter point in late July. The market still prices in a 24% chance the Fed could raise rates in December, but arguably a 25-basis-point increase after a rapid climb of more than 500 basis points won’t have a major effect on consumer and business borrowing trends. Ironically, stocks peaked right about when the Fed last hiked rates, and recently entered a correction, down 10% from the most recent 52-week high. “If the Fed pause were really that exciting, stocks would be up since July,” says Schwab’s Gordon. “Yet there has been no pause rally; it’s been the exact opposite.

Scary care costs: One frightening thing this Halloween season is the rising cost of childcare, Bank of America (NYSE:BAC) said in a recent report. It’s risen 30% since 2019 and may be one element causing people to draw down their savings. Last week’s Personal Income and Personal Spending data from the government showed that the U.S. savings rate fell to the lowest level since December 2022, which ultimately could weigh on consumer sentiment and consumer spending—not necessarily helpful for the stock market. Rising childcare costs can also affect the jobs picture by driving some parents out of the workforce, according to Bank of America’s research. Specifically, among families that pay for childcare, there are fewer dual income households in 2023 than in 2019. “Our data finds families with childcare payments have been spending at a slower pace than the rest of the population since May,” the report said. “They are also dipping into savings at a faster rate. But the good news is that across income groups, even households that pay for childcare have considerable excess savings relative to 2019 levels, which could continue to provide a financial buffer.”

Talking technicals: There’s been a pattern lately where the market sells off Friday as investors fret over potential weekend geopolitical developments, then bounces back Monday if those events don’t raise too many new concerns. That appeared to be the case again, but recent weeks didn’t see stocks build on initial gains. The test now is whether Monday’s strength carries into coming days. The 10% correction line for the SPX is 4,130, marking the decline from its 2023 closing high of 4,588 on July 31.