Daily Insights
Stocks open higher
S&P 500 Index opened about 0.7% higher at a fresh all-time high while the Nasdaq saw a more modest gain.
- European markets broadly are up more than 1.5% in midday trading.
- Asian markets rose broadly led by Japan’s Nikkei, which closed 2% higher.
- Japan reported a 21.4% annualized increase in gross domestic product, best in 40 years and above Bloomberg’s consensus (18.9%).
15 Asian nations including China, Japan, and South Korea signed the world’s largest regional free-trade deal.
An impressive effort from corporate America
Corporate America delivered an encore to a surprisingly good second-quarter earnings season with more of the same in the third quarter, despite a higher bar. S&P 500 companies came close to matching the biggest upside surprise ever recorded, with more than 14 percentage points of upside for the quarter. Read more in today’s Weekly Market Commentary: Q3 Results Brighten 2021 Picture.
Small caps join the party
After two years, the Russell 2000 Index finally made a new all-time high on Friday, ending one of its longest streaks ever without a new high. The other 10 times it went at least a full year without a new high, the returns going out a year were quite strong—up 6.9% six months later and 11.2% a year later on average. We look at this potentially bullish development on the LPL Research blog.
Week ahead
Retail sales for October highlight this week’s economic calendar on Tuesday. Other data includes:
- Tuesday: Import and export prices and manufacturing production, business inventories, and homebuilder sentiment
- Wednesday: Building permits and housing starts
- Thursday: Weekly unemployment claims, existing home sales, and leading indicators
Technical update
The S&P 500 finally closed at record highs on Friday, ending at 3585 and above the previous September 2 record. The Russell 2000 Index also finally eclipsed its previous record closing high, last set in August 2018. Small caps are outperforming large this morning, as both indexes continue higher. The breakout for the S&P 500 sets a target just above 3900, and 3580 can now be viewed as support.
COVID-19 news
The weekly trend in US COVID-19 case growth remained in the mid-to-high 30% range, which pushed the daily total to a record high of more than 170,000 on Friday and the seven-day average to over 146,000. Hospitalizations set a new record over the weekend at just below 70,000 and are increasingly worrisome given their geographic spread, which makes them more difficult to manage. More target lockdowns are likely, but a national lockdown appears unlikely (source: COVID Tracking Project).
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