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Markets up as earnings season kicks off

Markets Strong as Earnings Season Kicks Off

  • Stocks were positive across the board last week. We saw global markets (represented by the MSCI All Country World Index) up 2.2% and domestic stocks (represented by the S&P 500 Index) up 1.8%.
  • The start to Q3 2021 corporate earnings season was a strong one. As is always the case, major banks were the first to report and, for the most part, came in with strong numbers. According to FactSet, 80% of the S&P 500 companies that reported earnings so far have exceeded estimates.
  • The International Monetary Fund (IMF) adjusted the global growth expectation for 2021 to 5.9%, down from 6% earlier this year. For 2022, expectations haven’t changed at 4.9%. This is in line with our expectations, which is for strong growth above trend but at a decreasing rate.
  • Driven by rising energy costs, the Consumer Price Index was up 5.4% for the year ending September. This is something we want to keep an eye on moving forward, as the supply chain issue has consumed financial and mainstream headlines.
  • Consumer demand has remained very strong, with the latest retail sales report showing a 13.9% increase in September 2021 from the same month a year earlier. This strong demand and supply chain bottleneck presents challenges going into the holiday season.
  • In labor market news, new claims for unemployment dropped to the lowest weekly number since March 2020. Below is a good visual from Bloomberg and Edward Jones showing the combination of initial jobless claims and unemployment rate over the last decade.

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.

Mike Horwath

Mike heads the internal Investment Committee that is responsible for the investment direction of the firm. He works closely with Diversified’s financial planners to support the investment side of the lifelong financial planning process. Lastly, it’s Mike’s responsibility to oversee the ever-changing global investment landscape and work with the planners to evaluate the impact on each of our client’s strategies.

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