The large cap indexes gained for the fourth straight week as investors look to the start of Q3 earnings season.
The markets continued their winning streak last week, as the major large-cap indexes, including the S&P 500, logged gains for the fourth straight week.
The gains were modest, as the S&P only rose 0.2% to end the week at 5,751, but it did touch all-time highs earlier in the week at 5,765. The S&P 500 is now up 20.6% year-to-date (YTD), as the bull market roars on.
The Dow Jones Industrial Average did close the week at an all-time high of 42,353 after gaining 0.9% last week. The Dow is up 12.4 YTD.
The Nasdaq also ticked higher last week, rising 0.1% to 18,138. The Nasdaq has risen 20.8% YTD.
The only major benchmark that dropped last week was the small cap Russell 2000, which declined 0.5% to end the week at 2,213. It was the second straight week that the Russell 2000 has fallen. It is up 9.2% YTD.
Blowout jobs report lifts market
It was a fairly slow week for the stock markets, but it ended with a bang as the jobs report showed unexpected results.
Some 254,000 new jobs were created in September, which blew away estimates of 150,000 new jobs. It caused the unemployment to fall to 4.1%, from 4.2% the previous month.
As often is the case with markets, good news is not always good news, at least to some investors.
The good news is that a strong jobs report means that the economy is gaining strength and that is typically good for stocks. That showed on Friday as the Dow gained 341 points, the Nasdaq rose 212 points, and the S&P 500 ticked up about 1%, pushing these indexes into the green for the week.
But on the other hand, the unexpectedly good jobs report dashed the hopes of those investors who were hoping for another 50-basis point rate cut in November. That school of thought is based on the notion that the economy looks too strong to warrant another oversized rate cut.
I personally don’t think another 50-basis point cut was in the cards to begin with, even if the jobs report was bad, but apparently there were some who did think that. And those that did may have been disappointed, thus the muted response to the blowout jobs report, which has carried over to this week, when the markets opened lower on Monday.
Banks kick off Q3 earnings
This is a big week for the markets as Q3 earnings season begins in earnest. The first major company to report third quarter earnings is PepsiCo (NYSE:PEP) on Tuesday. Wall Street analysts are estimating earnings of $2.29 per share, up 1.8%, and revenue of $23.8 billion, up 1.7% year over year, for the beverage company.
Delta Air Lines (NYSE:DAL) reports earnings on Thursday, and analysts predict earnings of $1.55 per share, down 23%, and revenue of $14.7 billion, which would be up about 1%.
But earnings season really begins Friday when some of the largest U.S. banks report their results for Q3. Banks are seen as bellwethers for the economy, and, by extension stocks. If the results are strong or better than anticipated, it is usually a good sign for that quarter’s earnings. And if they are not, then it often portends more negative results.
Investors will be looking for clues when JPMorgan Chase (NYSE:JPM), the nation’s largest bank, reports earnings Friday morning. Analysts are targeting EPS of $4.01, which would be down 7% year over year, and revenue of $41.7 billion, up 5%. A major focus will be on investment banking revenue.
Also on Friday, the world’s largest asset manager, BlackRock (NYSE:BLK), reports Q3 earnings. Analysts are anticipating about $10.29 per share, which would be down roughly 5% year over year, and revenue of $5 billion, up 11% year over year.
In addition, Wells Fargo (NYSE:WFC) and Bank of New York Mellon (NYSE:BK) also release their third quarter earnings on Friday.
The results will probably determine if the S&P 500 can keep its winning streak going.