Week of October 18, 2021

A solid week of equity performance was capped off with a powerful rally last Friday, with the Dow gaining 1.58% for its best week since June.  The S&P 500 followed suit rising 1.82% for its best week since July, and the NASDAQ gained 2.18% for its best week since August.

So far, 41 S&P 500 companies have reported third-quarter earnings, with 80% of them beating ESP (earnings per share) expectations, according to data from FactSet. Talking into account the companies that have already reported and estimates of the rest, third-quarter profit growth will total 30%, the third highest quarterly growth rate for S&P 500 companies since 2010, according to FactSet.

“Wall Street was expecting a slowdown in spending, but it turns out the U.S. consumer is not to be messed with,” said Edward Aanda, senior market analyst at Aanda.  “Back-to-back months of better-than-expected retail sales data shows the consumer looks strong heading into the holiday season, Aanda added.

A number of big names are set to report earnings this week, including Netflix, Johnson & Johnson, United Airlines and Proctor to report Tuesday.  Tesla, Verizon and IBM are among other names to report later in the week.

“Growth in 2022 seems likely to be lifted by the lagged impacts of monetary stimulus, the lagged impacts of surging consumer net worth, reopening and inventory rebuilding,” Ed Hyman Evercore ISI wrote in a note to clients Sunday (October 17). “Supply chain problems are likely to ease, and unfilled demand from this year is likely to be met next year. Wages are likely to increase, lifting consumer incomes.”