Market Snapshot: Dow closes above 35,000, stocks book second straight week of gains after retail sales beat expectations

U.S. stocks closed higher Friday, with major benchmarks booking a second straight week of gains, as quarterly results from Goldman Sachs and better-than-expected U.S. September retail sales helped fuel buying on Wall Street.

How did stock indexes trade?

The Dow Jones Industrial Average

jumped 382.20 points, or 1.1%, to close at 35,294.76.

The S&P 500 index

climbed 33.11 points, or 0.8%, to finish at 4,471.37, handily above its 50-day moving average at 4,436.74 for the first time, after slipping below that level near the end of September.

The Nasdaq Composite Index

advanced 73.91 points, or 0.5%, to end at 14,897.34.

On Thursday, the Dow rose 535 points, or 1.56%, to 34913, the biggest one-day point and percentage gain since July 20. The S&P 500 increased 74 points, or 1.71%, to 4438, its best day since early March, while the Nasdaq Composite gained 252 points, or 1.73%, to 14823, its best day since May.

All three major U.S. stock-market benchmarks posted a second straight week of gains. The Dow saw a weekly gain of 1.6%, while the S&P 500 advanced 1.8% and the Nasdaq rose 2.2%.

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What drove the market?

U.S. stock investors maintained a bullish stance Friday after a report on September retail sales indicated that Americans are spending enough money to sustain an economic recovery from the pandemic, even if consumers are paying more to do so.

Retail sales climbed 0.7% last month, the government said Friday. Economists polled by The Wall Street Journal had forecast a 0.2% decline.

“That’s a big surprise,” said Jim Smigiel, chief investment officer at SEI, in a phone interview Friday. After the spread of the delta variant of the coronavirus led to a rise in COVID-19 cases, “people are ready to get back in the mix and they’re doing that voting with their dollars,” he said.

While sales rose in most major categories last month, consumer sentiment in October has slipped. A reading of consumer sentiment from the University of Michigan fell to 71.4 this month, from 72.8 in September.

“Consumer sentiment dropped again, and the survey pointed to many worries on consumers’ minds that will continue to dim the pace of consumer spending into 2022,” wrote Robert Frick, corporate economist with Navy Federal Credit Union, in a daily note. However, he said that the jump in consumer spending and an increase in savings were mitigating factors to the dour outlook held by many Americans.

“The concerns are real, but so is the excess $1 trillion saved from stimulus and lack of spending during the shutdown, and so is the pent-up demand to spend across the board as the economy reopens,” Frick wrote.

Stock indexes have been trending up as Wall Street cheers a batch of third-quarter earnings reports that are beating expectations, including those from banks Morgan Stanley
Bank of America

and Wells Fargo

On Friday, Goldman Sachs

reported third-quarter net income of $5.28 billion, or $14.93 a share, compared with $3.23 billion, or $8.98 a share, in the year-ago period. Goldman’s stock rose 3.8% Friday, with the Dow component’s rally helping to buoy the price-weighted index.

Banks are viewed as bellwethers of economic health so their outperformance and outlooks from executives can embolden optimistic investors.

“The big macro theme is the reopening of the economy,” said Smigiel. “We’re seeing a reflection of increased activity.”

Next week will see a number of big names reporting across several sectors, including Johnson & Johnson

and Chipotle Mexican Grill

“There’s quite a long runway for the U.S. economy,” said Shawn Snyder, head of investment strategy at Citigroup’s U.S. consumer wealth management division, in a phone interview Friday. “It should continue to grow for the next couple of years.”

Which companies were in focus?

Shares of Alcoa Corp.

soared 15.2% Friday after the aluminum producer reported stronger-than-expected results, said it would pay its first dividend since 2016 and announced a $500 million share buyback.

Virgin Galactic Inc.

shares plunged 16.8% after delaying its next test flight and the start of its space-tourism business.

Shares of Charles Schwab Corp. SCHW rose 3.6% to another record Friday, after the discount broker reported third-quarter profit and revenue that rose above expectations, as continued bullish investor sentiment helped produce a fivefold increase in trading revenue. 

Shares of Prologis Inc. PLD increased 0.9% after the real-estate investment trust focused on leasing logistics facilities reported third-quarter earnings that rose above expectations, and boosted its full-year outlook, amid record increases in market rents and valuations. 

How did other assets trade?

The 10-year Treasury yield

rose almost 6 basis points to 1.574% Friday, but was still down 3 basis points for the week. Yields and debt prices move in opposite directions.

Oil futures finished higher, with the U.S. benchmark

rising 1.2% to settle at $82.28 a barrel. Gold futures

ended lower Friday, falling nearly 1.7% to settle at $1,768.30 an ounce. For the week, gold gained 0.6%.

The Stoxx Europe 600

closed 0.7% higher for a weekly gain of 2.65%, while London’s FTSE 100

rose 0.4% Friday to advance 2% this week.

The Shanghai Composite

closed 0.4% higher Friday, but fell 0.6% for the week. Japan’s Nikkei 225

advanced 1.8% Friday for a weekly gain of 3.6%.

—Barbara Kollmeyer contributed to this article.

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