Market Recap Week Ending October 22
- Dow 35,677 +383 or 1.0%
- Nasdaq 14,897 +193 or 1.3%
- S&P 4,544 +73 or 1.6%
- U.S. 10 Year Treasury Yield 1.643%, 7.3 bp or 4.6%
Earnings, Earnings, Earnings…
Earnings were the story of the week. Great numbers pushed the S&P within 15 points of a new high and vaulted the Dow to a new closing record on Friday. The Nasdaq and its leverage to growth stocks, is still struggling against the headwinds of higher interest rates which rose 4.6% this week (10-year US Treasury yield), and yet the index was still up 1.3% for the week. Amongst the biggest winners this week were Chipotle Mexican Grill (CMG) which seemingly crudshes their earnings estimates every quarter, Netflix (NFLX) which was helped along by their surprise hit, Squid Games, Tesla (TSLA) which crushed their margin numbers and traded to a new high, and railroad giant CSX (CSX).
All the economic data this week was acceptable and initial jobless claims continued to fall to pandemic lows with the second consecutive weekly print under 300,000 claims. At this point, the market narrative is firmly focused on earnings and next week could be a make-or-break scenario with fully 30% of the S&P 500 reporting. Highlights include tech giants Alphabet (GOOG), Microsoft (MSFT), Apple (APPL), and Amazon (AMZN); insight to the supply chain with United Parcel Service (UPS) and railroad giant Norfolk-Southern (NSC); consumer spending data with Visa (V), Coca-Cola (KO), McDonald’s (MCD), Ford (F), eBay (EBAY), Harley-Davidson (HOG), Yum Brands (YUM), Starbucks (SBUX), and Anheuser-Busch InBev (BUD).
Eyes on Social Media
Market Data Points Next Week
- Monday – None of note. Earnings: Facebook (FB)
- Tuesday – Consumer Confidence. Earnings: Alphabet (GOOG), Microsoft (MSFT), Visa (V), Advanced Micro Devices (AMD), Texas Instruments (TI), Twitter (TWTR), United Parcel Service (UPS).
- Wednesday – Durable Goods. Earnings: CocaCola (KO), McDonald’s (MCD), Boeing (BA), General Motors (GM), Ford (F), Norfolk-Southern (NSC), eBay (EBAY), KLA Corp (KLAC), Harley-Davidson (HOG).
- Thursday – Initial Jobless Claims, GDP. Earnings: Apple (APPL), Amazon (AMZN), Caterpillar (CAT), Comcast (CMCSA), Yum Brands (YUM), Starbucks (SBUX), Anheuser-Busch InBev (BUD),
- Friday – Core Inflation and Chicago PMI. Personal income and spending.
Last week’s trading…
Monday– Dow (36) to 35,258, Nasdaq +124 to 15,021, S&P +15 to 4,486.
- Market initially fell this morning on poor Chinese economic data. Chinese GDP printed at 4.9% annual growth vs 5.2% expectations and industrial production also missed.
- However, as the yield from the 10-year U.S. Treasury fell back from a high of 1.627% to settle only up 1 bp to 1.58%, growth stocks, to which both the Nasdaq and the S&P 500 are highly leveraged, rallied.
- Seven of the eleven S&P sectors traded higher today with Consumer Discretionary, Technology and Communication Services leading the rally. Healthcare and Utilities were the worst performers.
Tuesday – Dow +1298 to 35,457, Nasdaq +107 to 15,129, S&P +33 to 4,519.
- More earnings beats: all of the following beat their numbers handily, Netflix (NFLX), Proctor & Gamble (PG), Johnson & Johnson (JNJ), and United Airlines (UAL).
- Nine of the eleven S&P sectors traded in the green today led by Health Care, Utilities, and Energy. The sole sector in the red was Consumer Discretionary.
- The September swoon has been largely made up with both the Dow and S&P 500 within 1% of their respective highs and the Nasdaq within 1.8% of its high.
- The 10-year U.S. Treasury yield rose almost 6 bp to 1.638%.
Wednesday – Dow +152 to 35,609, Nasdaq (7) to 15,121, S&P +16 to 4,536.
- The Fed’s Beige Book reported higher prices, higher wages, and higher levels of employment but growth slowing to a “modest to moderate” pace in September.
- Earnings: Tesla (TSLA) traded down post-close despite beating their numbers and reporting record margins, Lam Research (LRCX) beat their earnings numbers but reported a slight miss on revenues and traded down 2% in the extended session, railroad company CSX (CSX), traded up 3% after beating their earnings and revenues estimates.
- Eight of eleven S&P sectors traded higher today, but were led by the defensive sectors: Utilities, Real Estate and Healthcare.
- The 10-year U.S. Treasury yield edged higher 0.6bp to 1.644%.
Thursday – Dow (6) to 35,603, Nasdaq +94 to 15,215, S&P +13 to 4,549.
- Initial Jobless Claims were 290,000 vs expectations of 300,000 and last week’s slightly revised higher print of 296,000.
- The Philly Fed Index declined to 23.8, down 7 points from the October 30.7 print but any number above 0 indicates expansion. This is still a very healthy number.
- Earnings: AT&T (T) beat numbers but analysts worried about their reliance on promotions, Intel (INTC) missed and guided down, Chipotle (CMG) crushed their numbers and have been passing increased cost onto their customers, American Airlines (AA) reported their smallest quarterly loss since the pandemic began, Southwest Airlines (LUV) beat their numbers as did Alaska Airlines (AA).
- The 10-year U.S. Treasury yield rose nearly 4 bp to 1.68%.
Friday – Dow +74 to 35,677 (record close), Nasdaq (125) to 15,090, S&P (5) to 4,544.
- Seven of eleven S&P sectors to traded positively today led by Financials, Energy and Consumer Staples. The worst performing sectors were Communication Services, Consumer Discretionary and Technology.
- October Markit Manufacturing PMI missed at 59.2 vs 60.5.
- October Markit Services PMI beat at 58.2 vs 55.5.
- American Express (AXP) crushed their numbers and traded up 5.4%.
- The 10-year U.S. Treasury yield fell 3.7 bp to 1.643%.
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Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, and TSLA.