Positive Week into Earnings Season – Monday Morning Market Memo – October 11, 2021

Positive Week into Earnings Season – Monday Morning Market Memo – October 11, 2021

Good morning,

Despite a disappointing headline jobs report last Friday morning, the major stock market averages ended a volatile week of trading in positive territory.  For the week as a whole – the Standard & Poor’s 500 Index rose .8% to 4,391 – the Dow Jones Industrial Average (faring the best of the three major indices) gained 1.2% to 34,746 – and the NASDAQ Composite edged .1% higher to 14,579.

The U.S. Department of Labor reported the economy added 194,000 jobs last month, which was well short of the 500,000 number expected by the markets.  On the bright side, the unemployment rate came in at 4.8%, better than the consensus estimate of 5.1% and average hourly earnings were nicely higher.  Additionally, August jobs numbers were revised up to 366,000 from the initial read of 235,000.  So it was mixed messages, and Friday was actually one of the least volatile days of last week – with the Standard & Poor’s 500 Index and Dow Jones Industrial Average trading in a relatively tight range and closing the day little changed.

On balance and looking at the totality of the jobs report, it doesn’t seem like it will alter the path of Federal Reserve monetary policy – which is a key issue for the financial markets.  General expectations before the employment report were for the Fed to announce a reduction in asset purchases (tapering) at the November meeting, and we believe that is still the most likely scenario at this point.  However, that consensus view may come into question if things including COVID, the supply chain, or economic growth worsens – so there is plenty on the radar.

Looking the week ahead, it is the beginning of earnings season.  We consider ourselves fortunate here in New England to have four distinct seasons, and are currently enjoying the transition into fall with some cool and refreshing temperatures.  Of all the seasons however, our favorite is earnings season, which kicks off this week!  The action will be dominated by the big banks, as JPMorgan ChaseBank of AmericaCitigroupWells Fargo, and Goldman Sachs are all scheduled to report their results.

Away from the banks, we’ll be watching numbers from companies including FastenalDelta Air LinesDomino’s PizzaUnitedHealth Group, and Walgreens Boots Alliance.  Ready or not, bring on the earnings!

All the best – Southport Station Financial Management, LLC