S&P 500 Closed Friday At Record High Again On Strong Earnings Reports
Published Friday, October 29, 2021 at: 7:19 PM EDT
Despite some bad economic news this past week, the Standard & Poor’s 500 stock index closed today at a record high on stronger-than-expected earnings reports.
This past week, a sluggish 2% growth rate was reported for the third quarter by the U.S. Bureau of Economic Analysis. Amazon’s reported lower than expected earnings, and the Federal Reserve raised its estimate of the current inflation rate. Yet investors focused on the good news on corporate earnings and appear to agree with the Fed’s prediction that the elevated inflation rate will revert to 2% by the end of 2022.
With nearly half of the companies in the S&P 500 having reported their third quarter earnings, 82% of them reported profits above expectations, according to a story buried on page B11 of the print edition of The Wall Street Journal Thursday, quoting data from FactSet.
Earnings drive stock prices and better than expected earnings drive stock prices to levels that are better than expected, too.
Supply chain problems are cited as the main cause of higher prices that have pushed the inflation rates higher than it’s been in three decades. U.S. central bankers at their most recent meeting stuck to their prediction that inflation, as measured by the Personal Consumption Expenditure Deflator (PCED), will plunge back to about 2%. PCED is slightly different from the Consumer Price Index; it is the inflation index referenced in Fed policy statements. The dotted gray lines reflect the range of inflation forecasts by members of the Federal Open Market Committee, which sets U.S. lending rates.
If the Fed is right, then inflation will revert to its trend rate of 1.5% annually, which it clung to for a decade before Covid. But the Fed in recent months has raised its forecasted inflation rate and extended time wit will take to revert to 2%, while sticking to its assertion that inflation will not become a long-term problem.
So far, stock market investors have been buying into the Fed’s view that high inflation will be transitory.
The Standard & Poor’s 500 stock index closed this Friday at an all-time high of 4,605.38. The index gained +0.19% from Thursday and was up +1.32% from last week. The index is up +69.21% from the March 23, 2020, bear market low.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation. Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.
2023
-
Latest On Inflation, Consumer & Business-Owner Optimism
-
Slower Growth But Economic Outlook Remains Bright
-
Labor Market And Inflation Drove Stocks Higher
-
Costlier Homes Expected To Appreciate 4% Annually For The Next Five Years
-
Leading Economic Index Falls For 16th Straight Month
-
Tax-Sensitive Investment Planning In 2023
-
A Healthy Recipe For Growth Is Simmering
-
Good News About The U.S. Economy
-
The New Bull Market Has Broadened
-
An Economy Goldilocks Would Definitely Live With
-
Monthly Pace Of New-Job Creation Slowed In June, Which Is Good News
-
Standard & Poor's 500 Gained 9.9% In Q2 2023
-
This Week’s News For Investors
-
This Week’s News For Investors Is Very Good
-
Why The New Bull Market Theory Was In The News This Past Week
-
Strong Jobs Report Caps A Week For The Record Books
-
Why Stocks Rose Friday Despite A Rise In Inflation In April
-
Weekly Investor Update
-
The Confluence Of Bad News For Recent Retirees And Those About To Retire
-
Good And Bad News This Week For Investors
-
Getting There: The Economic Balancing Act Progressed In March
-
Stocks Gained Friday But Closed Fractionally Lower For The Week
-
Good News On Inflation But A Recession May Be Hard To Avoid
-
Analysis: The First Data Since The Banking Crisis Erupted In March