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October Gains Overcome September Pains as S&P Closes the Month at Record Highs

Weekly Update – October 29, 2021

  • The S&P 500 index rose 1.3% last week, lifting October’s monthly advance to 6.9%, as US corporations’ Q3 financial results continued to come in mostly above estimates.
  • The market benchmark ended Friday’s session at 4,605.38, up from last Friday’s closing level of 4,544.90 and marking its highest closing level ever. The index also reached an intraday record high Friday at 4,608.08.
  • Friday was the final trading day of October, which started Q4 on a strong note and wiped out the S&P 500’s 4.8% September slide. With just two months remaining in 2021, the index is now up nearly 23% for the year to date.
  • The gains came as quarterly earnings reports have largely surpassed expectations at a time when supply-chain challenges, the continuation of the COVID-19 pandemic and inflation concerns have persisted. In many cases, these issues haven’t dented profits by as much as analysts and investors had feared.
  • The consumer discretionary sector had the largest percentage increase of the week, up 4%, followed by gains of 2% each in communication services and technology.
  • Four sectors were in the red last week: Financials fell 0.9%, energy shed 0.8%, utilities declined 0.5% and industrials edged down 0.3%.
  • The consumer discretionary sector’s gainers included shares of Tesla (TSLA), which rallied 22% last week to record levels and sent the electric car maker’s market value above $1 trillion following an order for 100,000 vehicles from car-rental company Hertz Global.
  • In communication services, shares of Alphabet (GOOGL) rose 7.6% as the parent of Google reported Q3 earnings and revenue above year-earlier results and analysts’ mean estimates.
  • In the technology sector, Enphase Energy (ENPH) shares soared 31% as the supplier of solar power equipment reported fiscal Q3 earnings and revenue that roughly doubled from year-earlier results and topped analysts’ mean estimates.
  • On the downside, the financial sector’s decliners included Huntington Bancshares (HBAN), which reported Q3 earnings that fell from the year-earlier period and missed analysts’ mean estimate despite revenue being up from the year-earlier period and slightly above the Street view. Shares slipped 5.6% on the week.
  • Next week, the companies releasing quarterly financial results are expected to include Mosaic (MOS), Simon Property Group (SPG), Pfizer (PFE), DuPont (DD), CVS Health (CVS), Kellogg (K) and American International Group (AIG).
  • On the economic front, the market will be focused on a two-day meeting of the Federal Open Market Committee as well as October employment data being released next week. The FOMC meeting will conclude Wednesday. ADP will release October private-sector employment numbers on Wednesday, followed by the Labor Department’s weekly jobless claims on Thursday and monthly nonfarm payrolls on Friday.

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