Stocks rose on Friday to post a robust weekly advance, with stronger-than-expected earnings and economic data helping lift the S&P 500 for a third consecutive day. The blue-chip index closed out the week higher by about 1.8% in its best one-week increase since July.
A new report from the Commerce Department showed an unexpected rise in U.S. retail sales in September and helped further lift sentiment, with consumer spending holding up more strongly than expected even given the latest rise in prices and lingering virus-related impacts.
Shares of big bank stocks including Bank of America (BAC), Citi (C) and Morgan Stanley (MS) ticked up during the pre-market session. The stocks had jumped a day earlier, after these banks posted much stronger-than-expected third-quarter earnings results. Peer banking titan Goldman Sachs (GS) also reported much stronger-than-expected earnings results before the opening bell Friday morning, sending shares sharply higher.
This week's early batch of stronger-than-anticipated quarterly results has helped assuage investors' concerns over a sharp deceleration in corporate profits, especially as expenses mount for companies across industries in the face of higher input and labor costs.
Investors have at least temporarily looked through ongoing reports and company commentary around shipping challenges and heightened prices. Nw inflation data this week also showed price increases at both the consumer and producer levels held at historically high levels last month.
Still, other upbeat economic data helped to counterbalance these reports, with Thursday's weekly jobless claims report showing new unemployment filings fell more-than-expected to a pandemic-era low last week.
"We've had a lot of volatility recently, and I think markets are looking for any little glimpse or glimmer of good news," Jack Manley, JPMorgan Asset Management global market strategist, told Yahoo Finance Live. "The earnings season ... has been good so far, and if history suggests anything, it's only going to get better from here."
Other strategists agreed that stocks may be set up to continue marching higher as earnings season continues, given the lowered expectations many investors maintained heading into the reporting season.
"We've had a number of Wall Street strategists come out and call for a correction. If you look at things like the surprise indices, they're all trending lower ... earnings estimates for the third and fourth quarter have leveled off," Jack Janasiewicz, portfolio manager for Natixis Investment Managers, told Yahoo Finance Live. "To me it feels like the market's leaning bearish. And when we start to think about the buyer power that could come back in when everybody starts to flip positive — earnings might be that catalyst, [and] we could certainly see that upside."
4:00 p.m. ET: Stocks end higher, Dow adds nearly 400 points, or 1.1%
Here's where the three major indexes closed out Friday's session:
S&P 500 (^GSPC): +33.11 (+0.75%) to 4,471.37
Dow (^DJI): +382.2 (+1.09%) to 35,294.76
Nasdaq (^IXIC): +73.91 (+0.5%) to 14,897.34
10:08 a.m. ET: Consumer sentiment unexpectedly fell further in early October: U. Michigan
Consumer sentiment unexpectedly decreased in October, holding near its lowest level in a decade as concerns over the coronavirus, supply chain challenges and economic policies coming out of Washington, D.C. weighed on optimism.
The headline index in the University of Michigan's closely watched Surveys of Consumers fell to 71.4 in October from 72.8 in September, according to the institution's preliminary monthly report. Consensus economists were expecting a tick higher to 73.1, according to Bloomberg consensus data.
Subindices tracking both consumers' assessments of current conditions and outlook for the future each deteriorated during the month. One-year inflation expectations also jumped to 4.8%, or their highest level since 2008, from September's 4.6%.
"The Delta variant, supply chain shortages, and reduced labor force participation rates will continue to dim the pace of consumer spending into 2022," Richard Curtin, chief economist for the Surveys of Consumers, said in a press statement. "There is another, less tangible factor that has contributed to the slump in optimism: confidence in government economic policies has significantly declined during the past six months."
"When asked about their confidence in economic policies, favorable evaluations fell to 19% in early October from Biden's honeymoon high of 31% in April, while unfavorable policy evaluations rose to 48% in early October from 32% in April," he added, noting that this decline in confidence around economic policies was recorded across both Democrats, Independents and Republicans.
9:40 a.m. ET: Goldman Sachs 3Q results blow past Wall Street’s estimates
Goldman Sachs reported quarterly sales and profit that handily exceeded consensus estimates, with the big bank's results fueled by a surge in activity in its investment banking and equity sales and trading units.
Net revenue of $13.6 billion grew 26% over last year, surging above the $11.6 billion consensus analysts were expecting, according to Bloomberg data. Earnings per share totaled $14.93, also exceeding the $9.92 estimate.
These results were in turn led by an 83% jump in investment banking revenue, which came in at $3.55 billion during the quarter. Overall trading revenue was up 23% over last year to $5.61 billion, with included a 51% jump in equity sales and trading revenue. Fixed-income sales and trading revenue came in at $2.51 billion, topping consensus estimates but growing by a more modest 0.2% compared to the same quarter last year.
9:30 a.m. ET: Stocks open sharply higher after earnings, retail sales top estimates
Here's where markets were trading just after the opening bell Friday morning:
S&P 500 (^GSPC): +18.32 (+0.41%) to 4,456.58
Dow (^DJI): +221.97 (+0.64%) to 35,134.53
Nasdaq (^IXIC): +30.59 (+0.24%) to 14,856.24
Crude (CL=F): +$0.97 (+1.19%) to $82.28 a barrel
Gold (GC=F): -$28.40 (-1.58%) to $1,769.50 per ounce
10-year Treasury (^TNX): +5 bps to yield 1.569%
8:30 a.m. ET: Retail sales unexpectedly rose in September
U.S. retail sales posted a surprise jump in September, climbing for a back-to-back month as Delta-related pressures on consumer spending at least temporarily eased.
The total value of retail sales increased by 0.7% in September compared to August, the Commerce Department said in its closely watched monthly report on Friday. This came following a 0.9% rise in August, which was upwardly revised from the 0.7% increase previously reported. Consensus economists were looking for a drop of 0.2% in September, according to Bloomberg data. Over last year, retail sales were up by 13.9%.
Contributions to the September rise in retail sales were broad-based. Sporting goods, hobby, musical instrument and book stores sales increased by 3.7% month-on-month in September, representing the largest percent increase during the month. This was followed by a 2% jump in general merchandise store sales, and a 1.8% jump in each of miscellaneous store retailers and gasoline station sales. Non-store retailers, or e-commerce stores, saw a just 0.6% increase in sales during the month.
Categories associated with the reopening picked up in September compared to August, when the Delta variant weighed on consumer mobility. Food services and drinking places saw sales rise by 0.3%, while clothing and clothing accessory store sales increased by 1.1%. Motor vehicle and parts dealer sales also swung back to a month-over-month increase, with these sales increasing by 0.5%.
7:30 a.m. ET Friday: Stock futures point to a higher open
Here's where markets were trading before the opening bell Friday morning:
S&P 500 futures (ES=F): +15.75 points (+0.36%), to 4,444.75
Dow futures (YM=F): +151 points (+0.43%), to 34,935.00
Nasdaq futures (NQ=F): +46.5 points (+0.31%) to 15,083.75
Crude (CL=F): +$0.77 (+0.95%) to $82.08 a barrel
Gold (GC=F): -$15.20 (-0.85%) to $1,782.70 per ounce
10-year Treasury (^TNX): +2 bps to yield 1.539%
6:11 p.m. ET Thursday: Stock futures hold onto earlier gains
Here's where markets were trading Thursday evening:
S&P 500 futures (ES=F): +4.75 points (+0.11%), to 4,433.75
Dow futures (YM=F): +36 points (+0.1%), to 34,820.00
Nasdaq futures (NQ=F): +22.5 points (+0.15%) to 15,059.75
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter