Strong Week on Wall Street

By: Sean Schmid, Chief Operating Officer – Penn Investment Advisors
Weekly Update – October 25, 2021

Stocks rallied last week on a stream of positive corporate earnings surprises.

The Dow Jones Industrial Average rose 1.08%, while the Standard & Poor’s 500 advanced 1.64%. The Nasdaq Composite index gained 1.29% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, was up 0.23%.^1,2,3

Earnings Ignite Rally

Fears over inflation, supply shortages, and slowing economic growth in China were pushed aside last week as investors reacted to a daily succession of positive corporate earnings surprises. After the Dow Industrials reached an all-time high intraday on Wednesday, fresh earnings reports, an increase in existing home sales, and a new pandemic low in initial jobless claims–and continuing claims–propelled the S&P 500 index to a new record high the following session.^4,5

Disappointing earnings before the market opened on Friday hurt a few social media stocks, resulting in a choppy trading session and a selloff in the Nasdaq to close out the week.

Solid Start To Season

Investors came into the earnings season anxious about whether businesses could extend the earnings growth momentum of recent quarters amid an increase in Delta infections, inflation, labor shortages, and supply-chain bottlenecks. The early results were encouraging. Of the 23% of companies comprising the S&P 500 index that have reported, 84% beat Wall Street consensus earnings estimates by an average of more than 13%.⁶

The earnings season may get more uneven in coming weeks since many of the companies potentially affected by labor shortages and inflation have yet to report. Nevertheless, these better-than-expected earnings buoyed investor spirits and allowed stocks to build on their October gains.

This Week: Key Economic Data

Tuesday: New Home Sales. Consumer Confidence.

Wednesday: Durable Goods Orders.

Thursday: Gross Domestic Product (GDP). Jobless Claims.

Friday: Consumer Sentiment.

^{Source: Econoday, October 22, 2021
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Monday: Facebook (FB), KimberlyClark Corporation (KMB).

Tuesday: Microsoft Corporation (MSFT), General Electric Company (GE), Advanced Micro Devices, Inc. (AMD), Twitter, Inc. (TWTR), Visa, Inc. (V), Alphabet, Inc. (GOOGL), Lockheed Martin Corporation (LMT), Eli Lilly and Company (LLY), Texas Instruments (TXN), United Parcel Service (UPS), Capital One Financial Corporation (COF).

Wednesday: The Boeing Company (BA), Ford Motor Company (F), Bristol Myers Squibb Company (BMY), General Motors (GM), Twilio, Inc. (TWLO), CocaCola Company (KO), McDonald’s Corporation (MCD), GlaxoSmithKline (GSK), ServiceNow, Inc. (NOW), Spotify Technology (SPOT), General Dynamics Corporation (GD).

Thursday: Apple, Inc. (AAPL), Mastercard (MA), Caterpillar, Inc. (CAT), Starbucks Corporation (SBUX), Merck & Company, Inc. (MRK), Shopify, Inc. (SHOP), Northrop Grumman Corporation (NOC), Comcast Corporation (CMCSA), Illinois Tool Works, Inc. (ITW).

Friday: AbbVie, Inc. (ABBV), Exxon Mobil Corporation (XOM), Chevron Corporation (CVX), LyondellBasell Industries N.V. (LYB).

^{Source: Zacks, October 22, 2021
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

Quote of the Week

“Give what you have to somebody; it may be better than you think.”

– Henry Wadsworth Longfellow

Tax Tips

Tax Tips on Identity Theft

Here are a few things to know when attempting to protect yourself against identity thieves:

The IRS never will contact you via email or phone to request personal information. If you receive a scam email or call that claims to be from the IRS, report it to phishing@irs.gov.

People can steal your identity by stealing your wallet or purse, receiving information they need over the phone or email, finding your personal information in the trash, or accessing information you provide to an unsecured website (only enter credit card information on websites that start with “https://clicktime.cloud.postoffice.net/clicktime.php?U=https%3A%2F%2F&E=sschmid%40pennadvisors.com&X=XID297ZJyPpM5347Xd3&T=FBC1&HV=U,E,X,T&H=23c298a0306430f35dfccc3b8ea5f31cf1c1c463”).

Your identity may have been stolen if you receive a letter from the IRS indicating that more than one tax return was filed in your name.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov⁷

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