#1 – Weekly Market Summary
Stock markets rallied this week as the S&P 500 set another new all-time high.
Investors have been waiting for the 3rd Quarter earnings season which unofficially started this morning with the major banks reporting mixed results.
JP Morgan (JPM) reported increased revenues, especially from investment banking, and higher than expected Net Interest Income, although profits were down on larger loan loss reserves.
In contrast, Wells Fargo (WFC) reported higher-than-expected profits based on lower-than-expected loan loss reserves and strength in its wealth management business. However, its 2024 Net Interest Income forecast fell -9% in response to the Federal Reserve’s interest rate cuts.
Through Thursday’s close, the Nasdaq gained +1.0%, while the S&P 500 and the Dow Jones gained +0.5% and +0.2%, respectively.
If readers are experiencing a sense of dejavu, it could be because the S&P 500 reached its 44th all-time-high this week. While this may sound like a lot compared to 2022 and 2023, when the S&P 500 reached an all-time high only one time (i.e., the first trading day of 2022), historically all-time highs are relatively common occurrences. The chart below shows the number of new all-time highs set by the S&P 500 over the last decade.
The current pace for the S&P 500 annualizes to about 56 new all-time highs this year. While impressive, this lofty number falls short of the 62 all-time highs reached in 2017 and a staggering 70 all-time highs recorded in 2021. To provide perspective, 70 all-time highs equate to a new record every 3.5 trading days.
Whether the S&P 500 can continue to set new all-time highs will likely be heavily influenced by 3rd Quarter earnings season...so stay tuned!
#2 - Q3 Earnings Outlook
Today marks the unofficial start to Q3 earnings season as several major banks report quarterly earnings.
The Q3 earnings season will be an important indicator if the US can in fact have a “soft economic landing.”
Analysts anticipate that the S&P 500 will provide its fifth consecutive quarter of earnings growth with a projected +4.2% annual increase. Although positive, the pace of growth is slowing from previous quarters.
Revenue growth for the S&P 500 is expected to be even higher at +4% annualized. Also, much lower than previous quarters.
The Technology sector is a standout, with anticipated revenue growth of 11.7%, far surpassing the S&P 500's estimated growth rate of 4%. While most sectors are expected to deliver positive revenue growth in Q3, the Industrials and Energy sectors are the only ones projected to show declines.
Overall, investors will keep a close eye on earnings growth as price/earnings ratios are currently higher than historic averages. The S&P 500's forward 12-month P/E ratio is currently 21.6, surpassing its 5-year average of 19.5 and its 10-year average of 18.0. The elevated stock valuations leave little room for earnings misses.
Source:Factset
#3 – Candy Crush
Trick-or-treaters hoping to collect handfuls of chocolate candy this Halloween might be facing a bit of a letdown.
According to market research firm Circana, U.S. confectionery companies are stocking store shelves with fewer Halloween chocolates and doubling down on cheaper gummies and licorice, such as Sour Patch Kids and Twizzlers. Prices on sugary non-chocolate sweets - though still cheaper than chocolate - are also up double digits, according to Circana.
The shift to gummies, licorice and flavored crèmes comes as chocolate makers face shrinking margins and slowing sales. Consumers have been curbing their cravings for costly chocolate, causing the candy companies to face a double-whammy, first from supply chain snarls during the pandemic and now from a cocoa bean shortage.
There is not only less chocolate candy for Halloween in stores, but it is also more expensive. Prices on seasonal chocolate candy have increased by as much as +7.5% from last year and +40% from 2020, according to data from NielsenIQ.
If you’re a chocolate lover, you may have to dig deep in your Halloween bag this year in order to find your favorite treat!
Source:Reuters
#4 - United Pizza Party
A United Airlines Captain recently saved the day in more ways than one when he made an emergency medical landing.
Flight 2480 from San Francisco was scheduled to land in Houston, Texas at 7 p.m. However, the flight took a turn mid-air when the captain asked for help from any on board medical professionals.
According to stats from FlightAware, United Flight 2480 was diverted to Albuquerque International Sunport and landed at 4:15 p.m. An ambulance was waiting to meet the plane, and a passenger was rushed off.
The emergency landing resulted in a delay, which then pushed some UA2480 crew members over the maximum shift hours allowed by the FAA. So, the passengers had to wait for a new flight crew before they could depart for their final destination. The new flight crew was due to arrive in time for a 10:30 p.m. departure.
Each passenger was initially given a meal voucher, but, unfortunately, the airport was closed for the evening.
The captain came up with a clever idea to feed the passengers—he ordered 30 pizzas and had them delivered directly to the gate! To expeditiously feed the 153 hungry passengers, he organized the pizza line in the only way that would make sense for a group of people sitting at a departure gate—by passenger seat assignments.
The passengers eventually arrived safely at the final destination. And thanks to one generous United Captain, they arrived safely and well-fed.
Source: Today
#5 – Shelter Dogs’ Second Chance
As animal shelters across the U.S. attempt to manage the overwhelming influx of animals, many are searching for ways to raise awareness about the dogs that struggle to find their forever homes.
This is where high school friends Eric Noxon and Joey Maslowski stepped in. They have made it their mission to use social media to raise awareness of overcrowded shelters and the countless dogs that are often overlooked by potential adopters.
Eric and Joey created an Instagram account, and for every new follower, they take a shelter dog on a run. In each video, they include clips from the run and highlight the unique qualities of each pup to help get them adopted. As their heartfelt videos have gone viral, their following has rapidly grown, now reaching 255,000.
Recognizing the potential for even greater impact, Eric and Joey began inviting celebrities to join their cause. They were thrilled to collaborate with renowned celebrity fitness trainer Erin Oprea, who joined them for a run and helped amplify their message to her 75,000 followers.
Their efforts have resulted in over 100 shelter dogs finding loving homes. Eric and Joey are working toward their ambitious goal of helping 1,000 dogs get adopted, and each day brings them closer to making a difference in the lives of countless shelter dogs.
Follow their journey on Instagram: @eric.and.joey
Have a Great Weekend!
Denver and the DSG Capital Advisors Team