Earnings season starts with a bang

  • Bank beats kick off reporting season amid mixed inflation and retail sales data
  • Yields swing, oil and other commodities surge
  • This week: Housing data, leading indicators, TSLA and NFLX earnings

Inflation numbers, consumer-spending data, surging oil prices, and interest rates may have given traders and investors plenty to think about last week, but economic data appeared to take a back seat to earnings season, as stocks rolled to their best week since July.

Thursday may have been the highlight—the S&P 500’s (SPX) biggest up day since March (+1.7%)—but the week’s fortunes really turned on Wednesday, when the index fell to a four-day low before closing higher as big banks began reporting their Q3 numbers:

Chart 1: S&P 500 (SPX), 8/10/21–10/15/21. S&P 500 (SPX) price chart.

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)

The headline: Stocks gain even as surging oil prices keep inflation concerns on front burner.

The fine print: In a reversal from a month ago, the Consumer Price Index (CPI) was the hotter of the two inflation numbers reported last week, although it didn’t exceed forecasts by much.1 The Producer Price Index (PPI) was in line with estimates (+0.5% in September), and increased less than it did in August. Also, the core PPI increase (excluding food and energy prices) was much lower than estimated (+0.2% vs. +0.5%), and down significantly from August’s 0.6% increase. The upshot: September’s numbers don’t reflect this month’s crude oil surge—the market has been up every day but one this month.

The number: +0.7%, the surprise jump in retail sales. Analysts had expected a flat to slightly negative number.

The scorecard: The Nasdaq 100 (NDX) tech index came out on top last week:

US stock index performance table for week ending 10/15/20. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)

Sector roundup: The strongest S&P 500 sectors last week were materials (+3.7%), real estate (+3.6%), and consumer discretionary (+3.5%). The weakest sectors were communication services (-0.5%), health care (+0.8%), and consumer staples (+0.9%).

Highlight reel: Protagonist Therapeutics (PTGX) +94% to $35.36 on Monday, ESS Tech (GWH) +128% to $23.80 on Tuesday, Jasper Therapeutics (JSPR) +105.1% to $14.79 on Wednesday. On the downside, Revance Therapeutics (RVNC) -25% to $20.45 on Tuesday, DatChat (DATS) -26.7% to $11 on Wednesday.

Futures action: Oil prices are higher than they’ve been since October 2014. November WTI crude oil (CLX1) hit a new contract high of $82.49/barrel on Friday and closed at $82.28. December gold (GCZ1) tagged a one-month high of $1,801.90/ounce on Thursday but pulled back Friday to end the week at $1,768.30. Biggest up moves: October bitcoin (BTCV1) +12.1%, December copper (HGZ1) +10.7%. Biggest down moves: November VIX (VXX1) -7%, December cocoa (CCZ1) -5.2%.

Coming this week

Housing numbers dominate the week’s economic calendar:

Today: Industrial Production and Capacity Utilization, NAHB Housing Market Index
Tuesday: Housing Starts and Building Permits
Wednesday: Beige Book
Thursday: Existing Home Sales, Leading Economic Indicators Index
Friday: Markit Composite PMI Flash

Earnings this week include:

Today: Steel Dynamics (STLD)
Tuesday: United Airlines (UAL), Las Vegas Sands (LVS), Halliburton (HAL), Procter & Gamble (PG), Lam Research (LRCX), Kansas City Southern (KSU), Netflix (NFLX), Johnson & Johnson (JNJ)
Wednesday: Abbott Laboratories (ABT), Biogen (BIIB), Verizon (VZ), Crown Castle (CCI), Tesla (TSLA)
Thursday: American Airlines (AAL), Southwest Airlines (LUV), AutoNation (AN), AT&T (T), Boston Beer Company (SAM), Intel (INTC), Union Pacific (UNP), Chipotle (CMG), Mattel (MAT), KeyCorp (KEY)
Friday: American Express (AXP), Cleveland-Cliffs (CLF), Honeywell (HON), Schlumberger (SLB)

This week’s IPOs include: Biofrontera (BFRI), MiNK Therapeutics (INKT), Augmedix (AUGX), Cingulate (CING), Stronghold Digital Mining (SDIG), P10 (PX), Vita Coco (COCO), Portillo's (PTLO), Enfusion (ENFN), Winc (WBEV). 

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

Climbing commodities

The basic definition of inflation is “rising prices,” and that’s exactly what’s been going on in many commodity markets in recent weeks. And it’s not just crude oil and related energy markets, although they’ve arguably had the biggest economic impact.

The following chart shows US commodity futures markets that have gained 10% or more over the past month, along with the S&P 500’s two-strongest sectors over the same period (far right, in purple):

Chart 3: One-month commodity futures returns, 10/15/21. 11 markets with double-digit returns.

Data source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)

While 11 commodities have posted double-digit percentage gains, just one sector (energy, thanks to the crude oil rally) has matched that feat. The SPX itself is down slightly over the past month.

A revived lumber market trading at a three-month high claimed the biggest return, but a few others have hit more notable milestones over the past couple of weeks, including oats (all-time high), cotton (10-year high), and coffee (seven-year high; not on chart).


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1 Econoday.com. CPI for September, 2021. 10/13/21.

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