While many investors were concerned about a sharp drop in growth after the second quarter's historical earnings season, it seems those concerns may have been premature. Banks started earnings season with better-than-expected results which have calmed any investor concerns. Other companies followed suit and have so far shown similar results. It appears that supply chain challenges, labor shortages, and rising prices have not harmed profits as previously thought, as these companies have been able to navigate these issues. We are now looking at a better environment for the S&P 500 (SPY) with a strong start to the corporate earnings season and positive economic data. I’ll discuss this and more below….(Please enjoy this updated version of my weekly commentary published October 20, 2021 from the POWR Value newsletter).
The market rose last week as banks opened the third-quarter earnings season with a bang. On Thursday, Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), and Wells Fargo (NYSE:WFC) posted strong results before the opening bell, and stocks surged on the day.
Banks are increasingly writing more consumer loans as the economy grows. The fact that top banks exceeded expectations bodes well for the economy as banks are considered economic bellwethers.