Market Indexes: It was another up week, with good earnings from major banks, and ongoing stronger energy prices supporting the market. The DOW had its biggest rise since June, and the S&P had its biggest rise since July.
Reuters reported:
“Wall Street’s main indexes rallied on Thursday, boosted by technology stocks and strong quarterly results from Bank of America (NYSE:BAC) and Walgreens Boots Alliance (NASDAQ:WBA), while better-than-expected economic data eased some concerns about higher inflation. Citigroup (NYSE:C), Bank of America, and Morgan Stanley (NYSE:MS) topped quarterly earnings estimates, helped by release of more reserves to cover loan losses, with torrid dealmaking, equity financing and trading activity adding to their profits.
"Analysts expect corporate America to report strong quarterly profit growth and will focus on commentary from companies on how they are going to battle rising costs, labor shortages and supply chain disruptions. Meanwhile, data showed the number of Americans filing new claims for unemployment benefits fell close to a 19-month low last week, while a separate report showed producer prices eased in September.”
Volatility: The VIX fell 8.6%, ending the week at $16.15.
High Dividend Stocks: These high dividend stocks go ex-dividend next week: Horizon Technology Finance (NASDAQ:HRZN), Gladstone Commercial (NASDAQ:GOOD), Gladstone Investment (NASDAQ:GAIN), Gladstone Capital (NASDAQ:GLAD), and Dynex Capital (NYSE:DX).
Market Breadth: 22 DJIA stocks rose this past week, vs. 25 the week before last. 75% of the S&P 500 rose, vs. 82% the week before last.
FOREX: The US $ fell vs. other major currencies this week, except the yen.
Economic News
“Analysts predict that earnings for companies in the S&P 500 rose nearly 28 percent in the third quarter, compared with a year ago, which would be the third-highest increase since 2010. But that’s not necessarily a positive sign for the overall economy.
"The sectors showing the biggest jumps in earnings are the few that benefit the most from inflation. Companies in the energy and materials sectors — like Exxon (NYSE:XOM) and Dow (NYSE:DOW)—are expected to report huge jumps in profits for the third quarter. By contrast, companies that are reluctant to pass higher costs onto consumers, like Amazon (NASDAQ:AMZN) and General Motors (NYSE:GM), are expected to have a disappointing quarter. Banks are in the middle, with trading businesses expected to fall short of last year’s windfall but consumer divisions picking up as the economy reopens.
On the most recent earnings calls at S&P 500 companies, some 70 percent warned that supply chain issues would be a negative factor for sales and profits.” (NY TIMES)
Reuters:
“U.S. House of Representatives gave final approval on Tuesday to a Senate-passed bill temporarily raising the government’s borrowing limit to $28.9 trillion, putting off the risk of default at least until early December. Democrats, who narrowly control the House, maintained party discipline to pass the hard-fought, $480 billion debt limit increase by 219-206.
"The vote was along party lines, with every yes from Democrats and every no from Republicans. Republicans insist Democrats should take responsibility for raising the debt limit because they want to spend trillions of dollars to expand social programs and tackle climate change. Democrats say the increased borrowing authority is needed largely to cover the cost of tax cuts and spending programs during former Republican President Donald Trump’s administration, which House Republicans supported.”
“Consumer prices jumped more than expected last month, data released on Wednesday showed, raising the stakes for the White House and Federal Reserve as they continue to wager that rapid inflation will cool as the economy returns to normal.
The Consumer Price Index climbed 5.4 percent in September when compared with the prior year, more than expected in a Bloomberg survey of economists and faster than its 5.3 percent increase through August. From August to September, the index rose 0.4 percent, also above expectations. The September gains came as food—especially meat and eggs—cost consumers more. Housing prices also accelerated, something that raised alarm bells among many economists. Shelter is an important part of overall inflation and upward pressure in that index tends to last for some time.”
Economic Calendar
Week Ahead Highlights: Q3 ’21 earnings season ramps up, with 7 DJIA stocks reporting, including Johnson & Johnson (NYSE:JNJ), Procter & Gamble (NYSE:PG), Verizon Communications (NYSE:VZ), and American Express (NYSE:AXP). Housing, Mfg, and Industrial reports are due out this week.
Coming Week’s US Economic Reports
Sectors: Basic materials led this past week, with communications services lagging again.
Futures: WTI crude rose 4.17%, ending at $82.66, another 7-year high, its highest close since 2014.
