U.S. equities traded higher in the prior week, with the S&P 500, the broad benchmark, notching a six-week win streak, its longest weekly advance of the year. Additionally, the Dow Jones Industrial, the blue-chip gauge, surpassed the 43,000 point milestone for the first time in the index’s history.
This week’s advance is largely attributable to the combination of strong earnings, a robust retail sales report, steady housing starts, and increased consumer confidence that the Federal Reserve will achieve a soft landing.
On the corporate earnings front, financials continued to pour in with all major banks posting higher. Morgan Stanley, JPMorgan, and Goldman Sachs showed a rebound in investment banking and underwriting. Bank of America, Citigroup, and Charles Schwab have also reported earnings greater than expected. The banking system as a whole has portrayed an image that the economy is in good shape and that banks are well positioned to support further economic expansion.
On the other hand, the tech sector went on a bit of a volatile ride in the prior week after the Dutch chip equipment supplier ASML missed on their quarterly bookings expectations, which sent the whole sector tumbling. Two days later, the world’s largest contract chipmaker Taiwan Semiconductor Manufacturing (TSM) reported, posting a dominant quarter, which ultimately reversed sentiment in the sector and encouraged investors back into artificial intelligence related stocks.
On the economic front, consumers showed continued resilience through higher-than-expected spending on retail sales.Retail salesincreased a seasonally adjusted 0.4% on the month, up from the unrevised 0.1% gain in August and above expectations of 0.3%.
The headline figure was largely impacted by a boost in e-commerce, a rise in miscellaneous store retailers (+0.4%), clothing stores (+1.5%), and bars and restaurants (+1.0%). These advances were offset by a decline in electronic and appliance store (-3.3%), and furniture and home furnishing businesses (-1.4%), along with a 1.6% drop in sales at gas stations as fuel prices fell.
The core-control group, which corresponds most closely with the consumer spending components of GDP as it excludes spending in the more volatile categories of automobiles, gasoline, building materials, and food services rose 0.5%, higher than the 0.1% expected.
The retail sales figures are adjusted for seasonality but not for inflation. Theconsumer price index(inflation) has risen 2.4% from a year ago, whereas sales increased 1.7% from a year ago.
Overall, the economy remains strong, and corporations are showing solid growth. For the week, the S&P 500 rose 0.9%, the Dow Jones Industrial advanced 1.0%, the Nasdaq Composite increased by 0.8%, and the Russell 2000 jumped 1.9%. Year to date, the S&P 500 and the Nasdaq Composite have both reported over 23% in gains.
