We were closed yesterday for the holiday, so you’re receiving this on Tuesday rather than our normally scheduled Monday mornings. THE WEEK ON WALL STREET The overhang of bumping against the federal debt ceiling was lifted last week with an agreement to extend the debt ceiling through early December, helping propel stocks to a weekly gain. The Dow Jones Industrial Average increased by 1.22%, while the Standard & Poor’s 500 added 0.79%. The Nasdaq Composite index gained 0.09%. The MSCI EAFE index, which tracks developed overseas stock markets, was flat (+0.11%). DEBT CEILING CONCERNS EVAPORATE, FOR NOW… After suffering losses on concerns over delays with raising the federal debt ceiling, stocks rebounded as the Senate moved toward finalizing a debt ceiling agreement. While the agreement is only a short-term solution, it was enough to embolden investors to buy stocks. The week’s rally ran out of gas on Friday, however, on a surprisingly weak employment report. Though the debt ceiling was the dominant concern in the markets last week, the market grappled all week with the headwinds of higher energy prices, rising bond yields, inflation, and less robust economic growth. FUZZY EMPLOYMENT PICTURE Employment remains a confusing and unpredictable element of this post-pandemic economic recovery. Automated Data Processing’s employment report showed private sector jobs rose by a robust 568,000. This hiring surge may have been aided by the end of extended unemployment benefits and the return of children to school. This improving labor outlook was reinforced the following day as weekly initial jobless claims fell below their four-week moving average, while continuing claims fell by nearly 100,000. The employment report on Friday was a different story. The economy added a disappointing 194,000 jobs, making September the slowest month for job growth this year. The unemployment rate declined to 4.8%, while an increase in wages generated inflation worries. THE WEEK AHEAD: KEY ECONOMIC DATA Tuesday: JOLTS (Job Openings and Labor Turnover Survey). Wednesday: Consumer Price Index. FOMC (Federal Open Market Committee) Minutes. Thursday: Jobless Claims. Friday: Retail Sales. Consumer Sentiment. THE WEEK AHEAD: NOTABLE COMPANIES REPORTING EARNINGS Wednesday: JPMorgan Chase (JPM), Goldman Sachs (GS), Delta Airlines (DAL), BlackRock, Inc. (BLK). Thursday: Wells Fargo & Company (WFC), UnitedHealth Group (UNH), Citigroup, Inc. (C), Walgreens Boots Alliance, Inc. (WBA), Morgan Stanley (MS). Friday: J.B. Hunt Transportation, Inc. (JBHY), The PNC Financial Services Group, Inc. (PNC). FINAL THOUGHTS Earnings season is upon us, which will set the tone for the remainder of the year. At least until December when the debt ceiling debacle will pop up again. September and October thus far have been their traditional seasonally weak selves as the market has corrected a bit the past month and a half. However, many think we could see a bit of a rally into year-end if corporate earnings and guidance will support it. The Delta variant of Covid is rolling over in the south, but may not have peaked yet in some northern states. This could have a bit of an impact were it to get really out of hand, but many of the northern states have more mitigation procedures in place that will hopefully help keep cases to a minimum. Have a great week!
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THIS WEEK'S UPDATE
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October 12, 2021
