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S&P Up 7.3% Year to Date as Earnings Come In and Election Approaches

Weekly Update – October 23, 2020

  • The S&P 500 index fell 0.5% this week in the first weekly drop since September as uncertainty about the Nov. 3 election and ongoing stimulus talks outweighed better-than-expected Q3 results from a number of US companies.
  • The market benchmark ended the week at 3,465.39, down from last week’s closing level of 3,483.81. With five sessions remaining in the month, the S&P 500 is up 3.0% for October. It is up 7.3% for the year to date.
  • The technology sector had the largest percentage drop of the week, down 2.2%, as investors appeared to be pulling back from some sectors that saw strong gains in recent months. Other decliners included consumer staples, off 1.2%, and real estate, down 1.3%. Communication services led the gainers with a 2.2% increase, followed by gains in utilities, financials and energy.
  • The mixed activity came as investors are concerned about whether a stimulus agreement will be reached in time for the Nov. 3 election, especially as COVID-19 cases remain elevated, but they also have been encouraged to see many companies’ Q3 results coming in above analysts’ expectations.
  • In the technology sector, shares of Citrix Systems (CTXS) fell 11% this week even as the workspace technology company reported Q3 earnings per share and revenue above Street expectations and boosted its full-year guidance.
  • In consumer staples, shares of Kimberly-Clark (KMB) fell 11% as the consumer products company posted Q3 adjusted earnings below analysts’ expectations despite higher-than-expected quarterly revenue and increased full-year guidance.
  • The real estate sector’s decliners included Crown Castle International (CCI), which reported Q3 adjusted funds from operations slightly ahead of analysts’ mean estimate and above its year-earlier results. Shares shed 5.1%.
  • On the upside, the communication services sector was boosted by the shares of Twitter (TWTR), which rose 10% on the week as analysts at Jefferies and MoffettNathanson raised their price targets on the microblogging site operator’s stock.
  • The energy sector’s gainers included Baker Hughes (BKR), whose shares rose 8.8% as the oilfield services company reported Q3 earnings per share that matched the Street view while revenue came in above analysts’ mean estimate.
  • Next week’s earnings calendar features Microsoft (MSFT), Pfizer (PFE), 3M (MMM) and Caterpillar (CAT) releasing their quarterly results Tuesday, United Parcel Service (UPS) and Boeing (BA) Wednesday, Apple (AAPL), Amazon.com (AMZN), Alphabet (GOOG, GOOGL) and Facebook (FB) Thursday, and Exxon Mobil (XOM) and Chevron (CVX) Friday.
  • Investors will get several readings on the housing market next week, with new home sales for September being reported Monday and the Case-Shiller national home price index coming Tuesday along with the home ownership rate. Pending home sales for September are set to be released Thursday.
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