The major stock market averages rallied into the weekend last Friday, with the Dow Jones Industrial Average leading the way with a gain of over 400 points, or just under 1%. Both the Dow and the Standard & Poor’s 500 Index ended the week at new all-time highs. The Dow rose 1.2% to 42,863.86, while the S&P 500 and NASDAQ Composite each rallied 1.1% to 5,815.03 and 18,342.94, respectively. All three indexes have now risen for five consecutive weeks and as a point of interest this was the S&P 500’s first ever close above 5800.
Factors behind the weekly rally included a continued belief the Federal Reserve will cut interest rates again when they meet in November, momentum buying into the rally, and a nice start to earnings season as major banks kicked things off with some solid results.
Starting with the Federal Reserve and interest rates, current probabilities are nearly 90% the Federal Reserve will cut interest rates by ¼ percentage point at their policy meeting next month, according to CME FedWatch. Now taking a look at the kickoff to earnings season…..
Shares of JPMorgan Chase and Wells Fargo rallied nicely after they posted better-than-expected quarterly earnings. Investors often view the health of the banking sector as an indicator for the health and condition of the overall economy. These results helped set a positive tone for the broader market on Friday and created optimism for what the rest of this earnings season may bring.
Earnings season ramps up during the week ahead, with companies including Citigroup, Bank of America, Johnson & Johnson, UnitedHealth Group, Procter & Gamble, Goldman Sachs, United Airlines, and American Express scheduled to report. Often in the spotlight, Netflix will likely be the most watched earnings report of the week when they report on Thursday.
As always, don’t hesitate to contact us with any questions or if you would like to set up a meeting.
All the best – Southport Station Financial Management, LLC