October 25-29, 2021 Recap
Equities Cap Fourth Straight Weekly Gain
Earnings Season Continues Strong
U.S. stocks climbed the last week in October, with the S&P 500 notching its longest weekly winning streak since April. Impressively, thanks to a stellar start to the third quarter earnings season, this year’s biggest pullback, a 5.2% drop from September 2 to October 4 – was fully recouped by October 20 (just 12 trading days). All three major U.S. equity indices ended the week and month at fresh all-time highs. The performance came despite earnings disappointments from two of the five-largest U.S. companies. This helps explain the Dow Industrial’s more muted gains last week.
For the Week…
The S&P 500 gained 1.35% last week, the Dow Jones Industrial Average rose just 0.40% and the tech-heavy Nasdaq Composite jumped 2.72%. The S&P 500 finished Friday at its 59th all-time high this year.
Early 3Q Earnings Insights
With results now in from 279 S&P 500 companies, third quarter earnings are surpassing analysts’ estimates by 10.3% with 80% of firms topping analysts’ projections. S&P 500 companies are delivering double-digit earnings beats for the sixth straight quarter; however earnings are substantially stronger in Financials and Cyclicals than in Technology.
Consumer Discretionary Tops Leaderboard
Seven of the 11 major sector groups posted gains last week, led by Consumer Discretionary (+3.98%), Communication Services (+2.04%) and Technology (1.98%). Financials (-0.84%) and Energy (-0.63%) declined the most.
Treasury Yields Rebound
Treasury prices rallied again last week, dampening yields amid inflationary pressures. Month-ending data showed that the Fed’s preferred inflation gauge rose 4.4% in September from a year ago, the fastest annual pace since 1991. For the week, the benchmark 10-year Treasury yield see-sawed down nine basis points (-0.09%) to 1.55%. The U.S. Dollar Index strengthened by 0.51% last week. U.S. WTI crude oil futures were little changed on the week, ending Friday at $83.57/barrel (+$0.15).