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And now the Dow has reached a new closing high as stocks finish up another week of gains thanks to a strong and reassuring start to earnings season. But we’re just getting started! October ends next week with reports from the five largest tech companies.
The index reached an intraday high back on Wednesday, but completed its record run on Friday by climbing 0.21% (or nearly 74 points) to 35,677.02. The Dow was up 1% for the week. The S&P, which closed at a record high just yesterday, slipped 0.11% to 4544.90. The result snaps a seven-day winning streak, but the index was still up 1.6% over the past five days.
The NASDAQ was roughed up a bit by huge plunges from Snap (SNAP, -26.6%) and Intel (INTC, -11.7%) due to ad business problems and soft sales, respectively. The index declined 0.82% (or about 125 points) today to 15,090.20. While it had the worst performance on Friday, the NASDAQ still saw a weekly gain of 1.3%.
In addition to some earnings turbulence, the market also came under pressure today after hawkish comments from Fed Chair Jerome Powell. He said the Fed is on track to begin tapering with a plan for completion by mid-2022, while also stating that rates could be raised on any serious risks of higher inflation expectations.
The big news this week, though, was the strong start to earnings season, which suggests to nervous investors that corporate profits and the economy in general are holding up very well under soaring inflation and severe global supply chain issues.
“Including all the results that came out through Friday, October 22nd, we now have Q3 results from 117 S&P 500 members or 23.4% of the index’s total membership,” said Director of Research Sheraz Mian in his latest article titled: “Previewing Big Tech Earnings”.
“Total earnings (or aggregate net income) for these 117 companies are up +46.2% from the same period last year on +16.3% lower revenues, with 85.5% beating EPS estimates and 73.5% beating revenue estimates.”
And now the real fun begins with some of the biggest tech names scheduled to go to the plate next week. We’ll be getting reports from Facebook (FB) on Monday, Microsoft (MSFT) and Alphabet (GOOG) on Tuesday, and Apple (AAPL) and Amazon (AMZN) on Thursday. These five companies now account for 22.9% of the total capitalization of the S&P 500 index, according to Sheraz Mian.
And there are hundreds of other releases on the schedule as well. So rest up over the weekend and buckle up for an even busier week to come…
Today’s Portfolio Highlights:
Surprise Trader: The final buy in this busy week of earnings is Tronox (TROX), a vertically integrated mining and inorganic chemicals business. This Zacks Rank #1 (Strong Buy) beat the Zacks Consensus Estimate by 22% in its most recent quarter, which was its second straight surprise. And now the company has a positive Earnings ESP for the next report scheduled on Wednesday, October 27 after the bell. Dave added TROX on Friday with a 12.5% allocation, while also getting out of Covenant Logistics (CVLG) with only a “small hit”. Read the full write-up for more on today’s action.
Have a Great Weekend!
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