U.S. markets and stock exchange traded funds climbed Thursday as better-than-expected earnings and economic data helped investors turn risk-on.
The Invesco S&P 500 Equal Weight ETF (RSP), which follows the S&P 500 Equal Weight Index (EWI), gained 1.7% on Friday. Meanwhile, the S&P 500 rose 1.7%, the Dow Jones Industrial Average was up 1.5%, and the Nasdaq Composite was 1.7% higher.
Lifting market sentiment, Citigroup, Bank of America Corp, and Morgan Stanley beat quarterly earnings estimates, strengthening the rebounding economy, which helped the banks release more cash previously allocated toward pandemic losses, while a bump in deals, equity financing, and trading also bolstered profits, Reuters reports.
Further fueling the broad market rally, the latest economic data revealed that the number of Americans filing for new unemployment claims declined last week to a 19-month low. A separate report showed producer prices also eased in September.
“Some of the things that worried the market in September, and even last week, as far as the inflation aspect and higher interest rates and the Delta variant I think maybe have lessened,” Alan Lancz, president, Alan B. Lancz & Associates Inc., told Reuters. “Not that it’s all over, but on a temporary scale at least, you can make a case for it trending in the right direction.”
While U.S. companies are largely expected to show a strong quarterly profit growth for the third quarter, especially when compared to the dismal performances last year, investors have been waiting to receive a cleaver outlook on how Corporate America has to say about rising costs, labor shortages and supply problems.
“The big uncertainty right now continues to be around the duration of this higher inflationary period,” Allen Bond, managing director, and portfolio manager at Jensen Investment Management, told the Wall Street Journal. “We are going to be looking for evidence and data that gives us a sense of how companies are managing” that, as well as supply-chain constraints.
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