Friday's Market Minute: Beats Relieve Markets

Stocks had a winning week following better-than-expected earnings reports resulting in strong end-of-week gains. On Thursday, following earnings beats from big banks and other large companies, the S&P 500 Index (SPX) saw its best day since March, closing 1.7% higher, while the Nasdaq-100 (NDX) climbed 1.9%.

The Dow Jones Industrial Avg. ($DJI) ended up 1.6% and the small-cap Russell 2000 (RUT) gained 1.4%. So far, 83% of the SPX members that have reported third quarter results have topped EPS expectations, according to the Earnings Scout, and the companies that have reported reflect a broad spectrum of industries. Earlier in the week, Delta Airlines DAL beat estimates but cautioned rising fuel costs will pressure profitability.

In the health sector, UnitedHealth UNH and pharmacy/retailer Walgreens Boots Alliance WBA both topped estimates. Bank of America BAC, Wells Fargo WFC, Morgan Stanley MS, and JPMorgan JPM all beat as well; however, JPM’s profit was helped by a net reserve release of $2.1B. Even semiconductors are getting a healthy start amid a global shortage since Taiwan Semiconductor (TSM), the world’s largest semiconductor foundry, beat EPS estimates and guided 4Q revenue above. This optimism is a nice retreat from the macro headlines like inflationary pressure and supply chain bottlenecks weighing on markets recently. In addition to earnings, lower interest rates are boosting stock gains. The benchmark U.S. 10-year Treasury yield saw three straight days of declines, but is inching higher Friday morning.

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