Medicare Agent News: Earnings Power Stocks Higher. Again.

Monday, October 18, 2021

Earnings Power Stocks Higher. Again.

By Brian Hershberg | Friday, October 15

Earnings Season's Greetings. U.S. stocks surged for a second consecutive session Friday as retail sales were surprisingly strong and companies' quarterly results continued to impress investors.

Major indexes notched their best week in months. The Dow Jones Industrial Average climbed 1.6% on the week, while the S&P 500 added 1.8%. The Nasdaq Composite was up 2.2%.

Headlining the earnings winners Friday was Goldman Sachs Group, whose profit rose 66% from the year-earlier period to $14.93 a share, well above the consensus Wall Street estimate of $10.14. Goldman's stellar showing continued a strong week for bank earnings. Meanwhile, shares of Alcoa, J.B. Hunt Transport, and Charles Schwab outperformed the market on the back of better-than-expected earnings.

Barron's reporters Jack Denton and Jacob Sonenshine have the full markets recap, featuring details of those earnings, here:

“While it’s very, very early in earnings season, so far the results are better than feared and that’s driving the rally,” wrote Tom Essaye, founder of Sevens Report Research.

Companies on the S&P 500 have been beating earnings estimates by a decent clip this earnings season. Third-quarter earnings had been coming in at about 14% higher than expectations by Friday morning.

Elsewhere in financial markets Friday: Shares of Johnson & Johnson climbed 0.7% as a Food and Drug Administration panel backed a booster of its Covid-19 vaccine, while shares of Moderna fell 2.3% as the FDA delayed a decision on whether to approve its vaccine for adolescents. Bitcoin surged 7% to top $61,300 for the first time since April as markets began to anticipate the arrival of a Bitcoin futures ETF, perhaps as soon as Tuesday.

Looking forward, money managers surveyed by Barron's say the long-term outlook is strong but the short-term prognosis remains concerning.

In our fall 2021 Big Money poll of institutional investors, 50% of respondents say they are bullish about stocks' prospects in the next 12 months, down from 67% in our spring polling. Some 38% are neutral and 12% are bearish, up from 26% and 7%, respectively, in the spring survey.

Consider:

“My hunch is that, in the near term, we’re in for more downside volatility than we’ve been seeing,” says Larry Bernert of Wilbanks, Smith & Thomas Asset Management in Norfolk, Va. “We’re not market timers, but we’re more nervous in the near term than we have been.”

In particular, Bernert worries about the trajectory of Covid-19, further supply-chain disruptions, and the sensitivity of lofty stock valuations to a coming tightening of monetary policy.

In other words, enjoy the moment while it lasts. Things could get rocky after the earnings cheer ends.