Week of October 25, 2021

U.S. equities are coming a solid week on the back of strong corporate earnings.  The Dow Jones Industrial Average gained more than 1% last week and set another record close on Friday.  The S&P 500 rose 1.7% last week, also posting its third positive week and hit another all-time high on Friday.  The three major stock indices have posted solid gains so far in October.  The Dow and S&P 500 are each up more than 5%, and the NASDAQ had gained 4.4% month to date.

Leading the October rally in the broader market has been the energy sector, which is up 11% this month.  Industrials, real estate, materials and financials have all popped at least 7% over the same period of time.

Of the 117 companies in the S&P 500 that have reported earnings to date, 84% posted numbers that beat expectations, according to Refinitiv.  S&P 500 companies are expected to grow profits by about 35% during the 3rd quarter.

“Rising tide of earnings is lifting all the boats and adding fuel to the bull market fire,” said Anu Gaggar, global investment strategist at Commonwealth Financial Network.  “The 3Q earnings season is off to a strong start despite concerns about supply bottlenecks and labor shortages.