U.S. stocks closed out the trading week near record territory on Friday, October 9, with the S&P 500 finishing at 7,811.54 — just below Tuesday’s record close of 7,818.93 — as investors positioned for the start of corporate earnings season and fresh inflation data.
The Dow Jones Industrial Average rose 0.8 percent to 51,654.95 and the Nasdaq Composite added 0.6 percent to 27,366.17 on Friday, leaving weekly gains of 1.2 percent for the S&P 500, 0.9 percent for the Dow and 0.6 percent for the Nasdaq, according to market data reported over the weekend.
Sector rotation drove much of the move. Healthcare, digital infrastructure and biotechnology stocks lent relative strength to the broader index, while the Nasdaq-100 lagged slightly after heavier selling in earlier sessions — a sign, analysts said, of investors leaning toward value and defensive names. The 10-year Treasury yield pushed to its highest level since 2002 midweek before easing to about 5.25 percent after strong demand at the 10-year auction, and Brent crude held above $100 a barrel.
Earnings take center stage this week, and Wall Street has set an unusually high bar. Per FactSet data cited in weekend analysis, third-quarter estimates actually rose 1.4 percent during the quarter — against an average cut of 2.2 percent over the past five years — with a record 72 companies issuing positive guidance and expected growth now at 29.6 percent. Of the first 19 companies to report, 84 percent beat estimates.
The catch is how narrow the growth is. Semiconductors are expected to grow earnings by nearly 127 percent, energy by about 119 percent and technology by roughly 63 percent, while consumer discretionary, utilities, healthcare and financials are expected to grow between just 1 and 4.4 percent. With valuations stretched and market leadership concentrated in a handful of large technology names, investors will be watching this week’s reports — and the coming inflation data — for any sign that the rally’s foundation is broadening or cracking.
