Oil companies Chevron and Exxon Mobil will be in the earnings spotlight at the end of a busy week.
David McNew/Getty ImagesStocks reversed direction and climbed to records Friday, capping a strong October as several catalysts all came together at once.
Friday, the Dow Jones Industrial Average ended the day up 89 points, or 0.3%, to close at a record 35,819.56. The S&P 500 rose 0.2% to close at a record 4,605.38. The Nasdaq Composite gained 0.3% to 15,498.39, also a record closing high.
October was a strong month for stocks. The S&P 500 has gained 6.9% for the month of October. The Nasdaq and Dow posted monthly gains of 7.3% and 5.8%, respectively. The indexes rebounded from an early autumn drawdown: In September, concerns about supply chain constraints and rising bond yields pushed stocks lower.
Several factors enabled stocks to rebound this month. Bond yields have paused in their larger ascent. Companies have mostly beat earnings estimates. And while risks still remain—yields aren’t necessarily finished rising and supply chain constraints aren’t easing much—retail investors bought the dip.
But Big Tech earnings put the issue of shortages on center stage Friday, causing stocks to tumble early on.
Apple (ticker: AAPL) stock fell 1.8% after the company reported a profit of $1.24 a share, in line with estimates, on sales of $83.4 billion, below expectations for $84.9 billion. The company said supply-chain constraints due to chip shortages were worse than expected. iPhone sales were $38.9 billion, below expectations for $41.5 billion.
Amazon (AMZN) stock dropped 2.2% after the company reported a profit of $6.12 a share, missing estimates of $8.92 a share, on sales of $110.8 billion, below expectations for $111.6 billion. The company said labor shortages, higher shipping costs, and other rising expenses are eating into profits. Management also guided for current quarter sales of $135 billion at the midpoint of its range, below analysts’ expectations for $142 billion.
Although the major indexes rose on Friday, the market was weaker than it looked. The slight majority of S&P 500 stocks were in the red, according to FactSet.
This comes as bonds yields slipped, indicating markets are reflecting slightly less optimism on long-term economic demand and inflation. The 10-Year Treasury yield fell to 1.56% from hitting 1.61% earlier. Markets are increasingly expecting a Federal Reserve rate hike — in response to rapidly rising inflation in the near-term — sooner rather than later, which could hurt the economy. Some on Wall Street have recently flagged the dynamic in the bond market as a potential risk to monitor.
In cryptocurrency markets, Ethereum—the leading crypto asset after Bitcoin—hit an all-time high above $4,400, according to data from CoinDesk.
Here are six stocks on the move Friday:
Chevron (CVX) gained 1.2% after the company reported a profit of $2.96 a share, beating estimates of $2.21 a share, on sales of $44.7 billion, above expectations for $40.5 billion.
Starbucks (SBUX) stock dropped 6.3% after the company reported a profit of $1, beating estimates of 99 cents, on sales of $8.1 billion, below expectations for $8.2 billion.
Newell Brands (NWL) stock rose 5.1% after the company reported a profit of 54 cents a share, beating estimates of 50 cents a share, on sales of $2.79 billion, above expectations for $2.78 billion.
Caterpillar (CAT) stock dipped 0.1% even after getting upgraded to Buy from Neutral at UBS.
Synchrony Financial (SYF) stock fell 0.4% even after getting upgraded to Buy from Neutral at Citigroup.
U.S. Steel (X) soared 13% following third-quarter earnings Thursday that smashed expectations and an announcement that the company would raise its dividend.
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
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October 30, 2021 at 03:18AM
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Stocks Clawed Their Way Back to Records. They Also Had a Great Month. - Barron's
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