S&P 500 Sits Near Record as Investors Brace for Bank Earnings and Inflation Reports
The S&P 500 closed Friday less than half a percent from its record as traders looked past 5.25% Treasury yields and $104 oil to next week's bank earnings and inflation data.
Stocks closed higher Friday, leaving the S&P 500 less than half a percent below its record as investors prepared for a week that will test whether corporate profits can keep growing despite expensive borrowing and oil above $100 a barrel.
The S&P 500 rose 0.59% to 7,811.54, finishing roughly 33 points below the 7,844.52 record it reached earlier in the week. The Dow Jones Industrial Average gained 423.31 points, or 0.83%, to 51,654.95, while the Nasdaq Composite added 0.64% to 27,366.17. For the week, the S&P advanced about 1.2%, the Dow 0.9% and the Nasdaq 0.6%.
Next week’s first evidence arrives Tuesday, when JPMorgan Chase reports results with an investor call at 8:30 a.m. Eastern, followed by Bank of America on Wednesday at about 6:45 a.m. Investors will look beyond headline profit numbers to lending, deposits and credit losses for signs of whether businesses are still borrowing to expand and households are keeping up with their debts.
Analysts expect third-quarter earnings for S&P 500 companies to rise 30.6% from a year earlier, according to LSEG data reported by Reuters — a forecast that puts pressure on management commentary about demand and costs to justify the market’s confidence.
Yields, oil and a thin rally
The advance came despite a punishing backdrop for borrowers. The benchmark 10-year Treasury yield traded around 5.25% Friday after touching its highest level since 2002 earlier in the week, according to market reports. The Federal Reserve raised its target rate range a quarter point on Sept. 16 to 3.75%–4% and meets again Oct. 27–28. Before then, officials will see September’s Consumer Price Index on Wednesday, Oct. 14 at 8:30 a.m. Eastern, with the Producer Price Index following Thursday. Brent crude settled about 0.4% higher near $104 a barrel.
Beneath the headline indexes, the rally looks fragile. Only about a third of S&P 500 members are trading above their 50-day moving averages, and the Russell 2000 — where just 27% of constituents sit above that line — posted its fifth straight weekly loss and sits roughly 8.5% below its high, according to Bloomberg’s analysis. Overseas, UK borrowing costs hit a 19-year high. Societe Generale strategists warned that a combination of 6% Treasury yields and $150 oil could send the S&P 500 down more than 20% next year, while a retreat to 4% yields and $80 oil would leave room for further gains.
Reporting based on coverage by JBizNews and Bloomberg via The Hindu BusinessLine.
