On Thursday, US equities approached all-time highs as new signs that Corporate America delivers on high earnings expectations boosted the major indices toward their best month of the year.
Ford Motor Co. and Tesla Inc. rose in the so-called consumer sector in the S&P 500, which led the benchmark index up. The Dow Jones Industrial Average also recovered from Wednesday's losses.
"We have a market that is driven by strong earnings, generally good economic news and a calm in the bond market, and therefore the path to least resistance is higher and equities remain the preferred asset class with low return potential on other asset classes." David Donabedian, Chief Investment Officer of CIBC Private Wealth Management, said.
Investors are digesting earnings from some of America's bell-ready companies. Caterpillar Inc. Industrial Clock increased after earnings. Ford soared after raising forecasts and resuming dividends. EBay Inc. fell after reporting disappointing results late Wednesday. Amazon.com Inc. and Apple Inc. reports results after the end of the general trade.
According to data compiled by Bank of America Corp., excluding financial firms, companies in the S&P 500 that announced results have boosted net-profit margins by 40 basis points to 12.4% from the previous quarter. However, energy and consumer staples posted better margins.
Earlier, a report showed that the US economy expanded at an annual rate of 2% in the three months to September, lower than the median estimate of 2.6% in a Bloomberg survey as consumer spending fell. The GDP price index also fell from the last quarter, although it still rose more than analysts' expectations. A separate report showed that weekly jobless claims fell to a pandemic low.
"As long as the economy is not going through recession or anything disastrous, but if things are delayed, if we're going on the right path, but at a slower pace, which means the policy support persists for longer - still positive for markets," Lee Ferridge, head of North America multi-asset strategy at State Street, said.
Here are some events to watch this week:
- Germany's GDP
- Consumer price index
- Canada's GDP
