Stock Market in Review This Week – 10/16/2020

The bond market was closed Monday in observance of Columbus Day, but the stock market was open all week – Columbus Day is the only federal holiday the New York Stock Exchange is not closed on.

This week the S&P 500 closed at 3,483.81, a gain of 0.19%, the NASDAQ finished at 11,671.56, a gain of 0.79%, and the Dow ended at 28,606.31, a gain of 0.07%.

Summary

This week, like previous ones, was choppy. After three down days in a row, the market was positive Friday to eke out small gains for the week. Most of the major banks reported quarterly earnings (details below), and many other big names report next week. There are still no major updates on the second round of stimulus, as the election creeps ever closer.

Worth Mentioning

• Consumer Price Index (CPI), also known as inflation, rose 0.2% in September. The cost of living has increased by 1.4% in the previous year
• Johnson & Johnson and Eli Lilly both paused the trials of their potential COVID-19 vaccine
• Consumer spending grew faster than expected, as retail sales grew 1.9% in September compared to estimates of 0.7%
• Apple announced its newest iPhone at its product event on Tuesday
• Disney announced a restructuring to make streaming its main focus for its media and entertainment divisions
• Mortgage rates fell to another record low
• Walmart announced it will have Black Friday sales broken into three different sales events
• Jobless claims totaled 898,000 last week, higher than estimates of 830,000

Bank Earnings

A flurry of bank companies reported earnings this week

• J.P. Morgan Chase announced it beat EPS and revenue estimates, due partly to better than projected trading results, and reduced reserves for loan losses
• Citigroup posted better than expected EPS and revenue, aided by a decline in net credit losses as credit costs stabilized
• BlackRock, the world’s largest asset manager, increased the company’s assets under management to $7.81 trillion and beat on EPS and revenue
• Goldman Sachs blew away the estimates for EPS and revenue due to great results from bond trading and asset management
• Bank of America posted results that beat estimates on EPS but missed on revenue, as the bank has been heavily impacted by the Fed’s lowering of interest rates
• Wells Fargo reported EPS short of estimates but beat on revenue, as they were also impacted by historically low interest rates
• Morgan Stanley generated EPS and revenue above analyst expectations, a result of stronger than expected trading

Other Earnings

Aside from the banks, several other big names reported earnings this week

• Johnson & Johnson beat EPS and revenue expectations, noting higher medical-device unit sales and demand for some drugs, and raised its full-year guidance
• Delta Air Lines missed on EPS and revenue estimates, as travel is still being impacted by the pandemic, but sees signs of improvement for Thanksgiving and Christmas travel
• UnitedHealth reported beating EPS and revenue estimates and raised its annual profit forecast
• United Airlines had lower EPS and revenue than expected, but the company lowered its daily cash burn this quarter compared to last
• Intuitive Surgical beat EPS and revenue forecasts, stating procedures performed using its da Vinci surgical robot system have rebounded well

Looking Ahead to Next Week

• China reports Q3 GDP Monday
• Data for housing starts and existing home sales are released Tuesday and Thursday, respectively
• Many companies release earnings next week, some of the most notable include: IBM, Procter and Gamble, Netflix, Texas Instrument, Lockheed Martin, Snap, Philip Morris International, UBS, Verizon, Tesla, Abbott Labs, Biogen, AT&T, Coca-Cola, Intel, Southwest, and American Express

Weekly Change In Each Sector:

Treasury Yield Rates

The 10-Year ended the week at 0.76%, compared to last week’s end of 0.79%

The 2-Year ended the week at 0.14%, compared to last week’s end of 0.16%