The stock market rose on Friday, as earnings continued to impress and retail sales data beat expectations.
Dow Jones Industrial Average
gained 382 points, or 1.1%, one day after the benchmark climbed 534 points. The
advanced 0.8% and 0.5%, respectively.
“Right on schedule, stocks are rising on the strength of early earning results,” writes Louis Navellier, founder of Navellier & Associates.
Companies on the S&P 500 have been beating earnings estimates by a decent clip this earnings season. Third-quarter earnings had been coming in at about 14% higher than expectations by Friday morning. Those beats have been driven by impressive profits from banks, which have benefited from higher bond yields and the release of billions of dollars that were previously reserved to absorb potential loan losses. Bank executives say the U.S. economy is back on its feet and that borrowers have improving credit.
After several quarters during which companies beat profit forecasts by more than 15%, the market had been concerned that analysts were already anticipated strong earnings in the third quarter, making it hard for companies to surprise by a wide margin.
The S&P 500’s rally has been broadening out. The index’s gain on Thursday was its largest since March 5 and the number of stocks that participated was the highest since June 21, according to Instinet. More than 65% of S&P 500 stocks rose on Friday, according to FactSet.
The majority of S&P 500 companies have not reported earnings yet, but supply chain constraints, higher product costs, and rising wages are likely to have pressured sales volumes and profit margins. That means investors should pay close attention to industrials like
Honeywell (ticker: HON) and consumer-staples stocks like
Procter & Gamble (PG) for information on those pressures when they report next week.
Meanwhile, retail sales for September rose 0.7% month-over-month, better than expectations for a 0.2% decline. August retail sales were revised higher to a gain of 0.9%. The year-over-year increase for September was 14%.
“This illustrates the strength of the American consumer, and we believe robust spending and borrowing will still continue,” wrote Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
Though the retail sales result showed overall strong consumer demand, it implied that inflation may have eroded some demand. Sales volumes accounted for some of the increase in spending, while price increases accounted for the rest,
Citigroup economists noted. The number of automobiles sold dove 6.3% month-over-month, but the overall spend on autos rose 0.5% because of higher prices.
rose 1.8% and the pan-European
was 0.7% higher.
The price of
was up 7.6% Friday afternoon, at more than $61,800. Optimism surged following a report from Bloomberg that the first exchange-traded fund tracking regulated Bitcoin futures would soon be approved by the Securities and Exchange Commission—a landmark moment for the crypto industry.
Here are six stocks on the move Friday:
Alcoa (AA) stock gained 15.2% after the company reported a profit of $2.05 a share, beating estimates of $1.76 a share, on sales of $3.11 billion, above expectations for $2.93 billion. The company announced a new $500 million share buyback program. Analysts at JPMorgan also raised their price target to $59 from $52.
J.B. Hunt Transport Services (JBHT) stock rose 8.7% after the company reported a profit of $1.88 a share, beating estimates of $1.78 a share, on revenue of $3.14 billion, above expectations for $3 billion.
Goldman Sachs Group (GS) stock gained 3.8% after the investment bank reported a profit of $14.93 a share, beating estimates of $10.18 a share, on revenue of $13.6 billion, above expectations for $11.7 billion.
Virgin Galactic Holdings (SPCE) was down 16.8% after the company delayed the launch of its commercial space-tourism business until the end of next year.
Moderna (MRNA) stock slipped 2.3% even after getting upgraded to Overweight from Neutral at Piper Sandler. The Food and Drug Administration delayed a decision on approving the company’s Covid-19 vaccine for adolescents, The Wall Street Journal reported.
Broadcom (AVGO) stock rose 1.1% after getting upgraded to Buy from Neutral at Goldman Sachs.
Write to Jacob Sonenshine at [email protected]