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Equities Push Higher as Q3 Earnings Roll in

Weekly Update – October 15, 2021

  • The S&P 500 index rose 1.8% last week, marking its largest weekly gain since July, as the Q3 earnings reporting season began with better-than-expected results while economic data also topped consensus views.
  • The market benchmark ended the week at 4,471.37, up from last Friday’s closing level of 4,391.34. The index is now up 19% for the year to date.
  • The week began with declines in the S&P 500 on Monday and Tuesday, but the index edged up Wednesday as Q3 reports began trickling in. Thursday, more earnings reports, as well as economic data, topped expectations, resulting in the S&P 500’s largest one-day gain since March. The positive momentum continued Friday as earnings and economic reports continued to surpass estimates.
  • The week’s strong earnings reports came from companies including health insurance company UnitedHealth Group (UNH), financial services company Bank of America (BAC) and pharmacy retail company Walgreens Boots Alliance (WBA). The upbeat economic data included a drop in weekly jobless claims to the lowest level since March 2020, a smaller-than-expected rise in the producer price index for September and an unexpected increase in September retail sales.
  • The materials sector had the largest percentage increase of the week, up 3.6%, followed by gains of 3.5% each in consumer discretionary and real estate. The technology sector was also strong, up 2.6%.
  • There was just one sector in the red for the week: communication services, which slipped 0.4%.
  • In the materials sector, shares of Air Products & Chemicals (APD) added 10% last week as the company and Louisiana Gov. John Bel Edwards unveiled an agreement to build a $4.5 billion clean energy complex in Ascension Parish. Air Products will build, own and operate the complex, which will produce more than 750 million standard cubic feet of blue hydrogen per day.
  • In consumer discretionary, shares of MGM Resorts International (MGM) rose 7.9% as Credit Suisse upgraded its investment rating on the casino operator’s stock to outperform from neutral. The firm said the market isn’t giving the stock full credit for four transactions MGM has announced since May.
  • The real estate sector’s gainers included Extra Space Storage (EXR), whose shares rose 7% last week. Morgan Stanley boosted its price target on the self-storage management company’s shares to $160 from $157.
  • On the downside, the decliners in communication services included Comcast (CMCSA), whose shares fell 1.2% last week as Raymond James downgraded its investment rating on the stock to market perform from outperform while cutting its price target on the shares to $60 each from $65. Goldman Sachs and Deutsche Bank also lowered their price targets on Comcast’s stock last week.
  • Next week, Procter & Gamble (PG), Johnson & Johnson (JNJ), United Airlines Holdings (UAL), Verizon Communications (VZ), Intel (INTC) and American Express (AXP) are among the companies expected to report quarterly results.
  • Economic data expected next week include September industrial production and capacity utilization on Monday, September building permits and housing starts on Tuesday, weekly jobless claims and September existing home sales on Thursday, and Markit’s early October purchasing managers indexes on both the manufacturing and services sectors on Friday.
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