Last week stock markets overcame the poor earnings results from some of America’s largest tech companies to post gains as investors cheered positive earnings surprises from traditional businesses, easing inflation data, and a rebound in economic growth. The chart below from MarketWatch and FactSet summarizes the month to date, and it looks like the Dow could record its best October performance in 45 years!
At week's end,
the Dow Jones Industrial Average rose 5.72%, while the Standard & Poor’s 500 advanced 3.95%. The Nasdaq Composite index added 2.24% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 4.89%.1,2,3
A "Spook-tacular" Week
The rotation out of technology and growth stocks into traditional and value stocks continued again last week.
Some mega-cap technology companies were under pressure last week on weak earnings and tepid fourth-quarter guidance. They reported multiple headwinds, including declining advertising revenues, loose expense control, and a slowdown in cloud growth.
Meanwhile, positive earnings surprises from “old economy” companies powered markets higher. This market bifurcation was evident in the divergence in the performance of the Dow Industrials and the Nasdaq. The S&P 500 posted a substantial gain despite its disproportionate weighting of mega-cap stocks, which helped illustrate the power of the rally. Momentum accelerated into Friday, aided by an easing in inflation and a solid third-quarter Gross Domestic Product (GDP) report.
Economic Growth Exceeds Expectations
After two straight quarters of negative economic growth, the initial estimate of the third quarter’s GDP came in at a solid 2.6%, exceeding economists’ 2.3% estimate. The surprising economic performance was largely attributable to an increase in exports, which narrowed the trade deficit, a development that may not repeat going forward.4
Particularly encouraging was the personal consumption expenditure price index, a report used by the Fed to track inflation. It increased by 4.2%, well below the 7.3% jump from a quarter ago.5
This Week: Key Economic Data
Tuesday: Institute for Supply Management (ISM) Manufacturing Index. Job Openings and Labor Turnover Survey (JOLTS).
Wednesday: Federal Open Market Committee (FOMC) Announcement. Automated Data Processing (ADP) Employment Report.
Thursday: Jobless Claims. Factory Orders. Institute for Supply Management (ISM) Services Index.
Friday: Employment Situation.
Source: Econoday, October 28, 2022
This Week: Companies Reporting Earnings
Tuesday: Pfizer, Inc. (PFE), Eli Lilly & Company (LLY), Marathon Petroleum Corporation (MPC).
Wednesday: CVS Health Corporation (CVS), Qualcomm, Inc. (QCOM), Fortinet, Inc. (FTNT), Humana, Inc. (HUM), Cigna Corporation (CI), Booking Holdings, Inc. (BKNG), Prudential Financial, Inc. (PRU).
Thursday: Block, Inc. (SQ), PayPal Holdings, Inc. (PYPL), Amgen, Inc. (AMGN), ConocoPhillips (COP), Regeneron Pharmaceuticals, Inc. (REGN).
Friday: Dominion Energy, Inc. (D), EOG Resources, Inc. (EOG).
Source: Zacks, October 28, 2022
"We should all do something to right the wrongs that we see and not just complain about them."
– Jacqueline Kennedy Onassis
Using the IRS2Go App
Did you know that the IRS has an app that makes it easy to check some things off your tax to-do list? Using the app, you can:
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov6
Satisfy Your Sweet Tooth With Dates
Do you have a sweet tooth but want to limit the amount of refined sugar you eat? Dates are just the answer! These nutrient-rich powerhouses are sweet, succulent, and good for you!
Dates are high in fiber, potassium, magnesium, and Vitamin B6, among many other nutrients. In addition, dates are high in antioxidants and may promote brain health, bone health, and blood sugar control.
Dates are easy to add to your diet. Snack on them, add them to dishes as a natural sweetener or blend them in a smoothie. These nutritious and delicious treats are perfect for kicking cookies and cakes without giving up an indulgent taste.
Tip adapted Healthline, November 27, 20197
What is worn by the foot and often bought by the yard?
Last week’s riddle: They can run side by side for thousands of miles; they are made of steel. While they constantly touch the ground, they seldom meet or touch each other. What are they? Answer: Railroad tracks.
Cathedral Rock at twilight, Sedona, Arizona
Footnotes and Sources
2. The Wall Street Journal, October 28, 2022
3. The Wall Street Journal, October 28, 2022
4. CNBC, October 27, 2022
5. CNBC, October 27, 2022
6. IRS.gov, July 25, 2022
7. Healthline, November 27, 2019
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Weekly Market Insights: Plenty of Treats for Wall Street This Week
October 31, 2022