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S&P Posts Gains in First Week of Q4, Energy Sector Leads and Real Estate, Health Care and Communications Sectors Lag

Weekly Update – October 08, 2021

  • The S&P 500 posted a 0.8% increase in the first full week of October and Q4 despite falling slightly Friday amid disappointment over weaker-than-expected US September job growth.
  • The benchmark index ended Friday’s session at 4,391.34, up from last Friday’s closing level of 4,357.04. The weekly gain, which follows a September slide that had the S&P 500 fall 4.8% last month, returns the index to the positive territory in which it has spent most of 2021. The S&P 500 is up 17% for the year to date.
  • The US stock market started and ended the week with losses; the S&P 500 fell Monday amid an outage of Facebook’s (FB) social media services and it fell Friday amid the weaker-than-expected September jobs data. The Labor Department’s September employment report showed nonfarm payrolls rose by only 194,000, well below the 500,000 jobs increase expected in a survey compiled by Bloomberg.
  • However, the index still rose on the week as gains posted Tuesday through Thursday, boosted by US lawmakers reaching a deal on a short-term debt-limit extension, outweighed the Monday and Friday declines.
  • All but three of the S&P 500’s sectors rose last week. Energy had the largest percentage gain, up 5%, followed by a 2.3% rise in financials. Other sectors up by more than 1% each included industrials, utilities and consumer staples.
  • The three sectors in the red were real estate, which slid 0.8%, health care, which slipped 0.3%, and communication services, which edged down 0.1%.
  • The energy sector’s climb came as crude oil futures rose. Among the gainers, Phillips 66 (PSX) shares added 13% as Piper Sandler upgraded its investment rating on the stock to overweight from neutral while lifting its price target to $87 per share from $85. Analysts at Cowen as well as Tudor, Pickering, Holt & Co. also raised their price targets on the stock.
  • In the financial sector, shares of Intercontinental Exchange (ICE) climbed 11% as the data, technology and market infrastructure company reported an 11% year-over-year increase in its exchanges’ total average daily volume for the month of September. For Q3, its total average daily volume rose 18% from the prior-year period.
  • In real estate, the decliners included Equinix (EQX), whose shares fell 4.9% on the week. Credit Suisse downgraded its investment rating on the digital infrastructure company’s stock to neutral from outperform, citing supply chain pressures, deployment delays and rising rates. The firm also reduced its price target on the stock to $731 from $942.
  • Next week, the Q3 earnings reporting period will begin. The companies expected to release their latest quarterly results next week include JPMorgan Chase (JPM), Delta Air Lines (DAL), Alcoa (AA), Bank of America (BAC), UnitedHealth Group (UNH) and Goldman Sachs Group (GS).
  • In economic data, next week’s reports are expected to include the September consumer price index on Wednesday, the September producer price index on Thursday, and September retail sales on Friday. October consumer sentiment is also anticipated Friday, among other reports.
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