US market weekly: S&P 500 ends higher amid strong economic signals and positive quarterly earnings

US market weekly: S&P 500 ends higher amid strong economic signals and positive quarterly earnings

Last updated: 16 Oct, 2021 | 03:03 pm

US market weekly: S&P 500 ends higher amid strong economic signals and positive quarterly earnings

From strong quarterly results, to rise in oil prices and inflation, a lot happened in the US markets this week. We have prepared an analysis on the most important factors that drove the US markets over the week. 

US indices started off on a weaker note on Monday as investors took a defensive stance ahead of the third-quarter earnings season. Most of the major equity sectors retreated, except for the energy and basic materials stocks. Investors were also waiting for fresh inflation data over the week. 

U.S. stocks extended their losses to the third straight session on Tuesday as fresh inflation data ahead of the third-quarter earnings this week weighed on sentiments. Input prices have been rising across many commodities and could hurt margins and earnings in the coming quarters.  All the three major indexes ended in negative territory.

US stocks gained on Wednesday due to positive earnings data though a key inflation report showed a faster-than-expected rise in inflation across a broad range of goods. The S&P 500 and Nasdaq each rose for the first time in four sessions, led by a rise in technology stocks.

US indices gained on Thursday with the biggest rally on Wall Street since March after the earnings results from the big banks topped expectations, and new weekly jobless claims showed a larger-than-anticipated improvement to a pandemic-era low. 

US stocks continued their rise on Friday with stronger-than-expected earnings and economic data helping lift the S&P 500 for a third consecutive day. However, volatility remained elevated due to a surge in energy prices and persistent supply-chain disruptions. For the week, S&P 500 ended 1.8% higher and Dow Jones 1.6% higher. 

Weekly market stats with IND

Let’s see the major developments during the week:

Macroeconomics signals: The Commerce Department reported that retail sales had defied expectations for a decline and jumped 0.7% in September although some of the increase was due to higher prices. The ten-year benchmark rates rose above 1.6% last week, reaching the highest level since June due to the release of the September CPI report, which showed inflation continues to run hot. 

Inflation data: On Wednesday, the Labor Department reported that core (less food and energy) had risen 4.0% for September above the Fed’s long-term 2% inflation target, but in line with August and consensus expectations. The rise in inflation not only showed up in prices for consumer goods and services, but also on government programs. The cost-of-living adjustment for Social Security was announced last week, and benefits are likely to rise by 5.9% in 2022, the largest increase since 1982. Incoming inflation data continue to support the case for the Fed to taper its bond buying. 

Labour Market: On Thursday, the S&P 500 Index recorded its biggest daily gain since March following news that weekly jobless claims had fallen to 2,93,000, a new pandemic-era low. This is an encouraging data point because declining initial claims is a leading indicator of positive employment conditions.

Delta variant remains a concern: The spread of the delta variant appears to have gradually slowed down as economic progress is coming back on track.  An average of roughly 84,245 coronavirus cases have been reported each day in the United States while the total cases have crossed the 44.9 million mark. However, to battle this, the pace of vaccination has also picked up. About 57.3% of the eligible American population (age 12 and over) are fully vaccinated and over 66.3% have received the first dose.

Oil prices at 3 year high: Global oil prices continued their climb to their highest level in over three years and further pushed higher by expectations that utilities and other firms would switch to oil from natural gas due to the supply shortage in Europe. The U.S. oil benchmark remained above $80 per barrel as demand rebounds while supply remains tight.