Bulls off to races as Q4 begins

Start your engines; the final quarter of 2017 has begun.

The S&P 500 rose 1.2 percent between Friday, September 29, and Friday, October 6. There’s a lot to be positive about: It was the fourth straight weekly gain and the longest winning streak since March. The index also hit a new record high, along with other benchmarks like the Nasdaq-100, Dow Jones Industrial Average, and Russell 2000.

So is it déjà vu all over again? As in recent weeks, sentiment reflected a belief that the economy will keep improving despite near-term headwinds from hurricanes Harvey, Irma, and Maria. Manufacturing and service gauges, for instance, hit their best levels in more than a decade.1 Job growth may have underwhelmed in terms of numbers, but optimists pointed to low unemployment and higher wages.2 Heck, even autos seemed to paint a rosy picture.3

Financials stayed in the fast lane, up  almost two percent on the week. They’ll probably remain in focus in the near term as major names like Citigroup (NYSE: C), JPMorgan (NYSE: JPM), and Bank of America (NYSE: BAC) report earnings. Consumer discretionaries and materials vied for the top stop as well.

Airlines may have been grounded over the summer, but they took off last week as Delta Airlines (NYSE: DAL) said business was holding up better than feared.4 Housing also built on recent gains and biotechs continued their advance to new 52-week highs.

Energy, on the other hand, skidded lower by almost one percent as sellers took profits on the heels of September's sharp rally. 

S&P 500, 4/5/17 - 10/6/17

Source: OptionsHouse by E*TRADE

On a single-name basis, Mylan (NYSE: MYL) was the S&P 500's top performer with a 22 percent gain thanks to a generic-drug approval.5 General Motors (NYSE: GM) took the runner-up spot, revving 11 percent to a new all-time high amid strong monthly sales. Netflix (NASDAQ: NFLX) took third billing  amid a flurry of call buying.

Navient (NASDAQ: NAVI) led to the downside with a 16 percent drop after Pennsylvania's attorney general accused the college-financing company of deceptive lending practices.6 H&R Block (NYSE: HRB) and Nordstrom (NYSE: JWN) also slid about 6 percent each.

This week begins with Columbus Day in the U.S., and potential uncertainty in Europe as Catalonia plans to declare independence from Spain. Tomorrow's quiet but Wednesday brings the first taste of earnings season from BlackRock (NYSE: BLK) and DAL, plus minutes from the last Fed meeting.

Thursday features results from megabanks C and JPM, along with crude-oil inventories and jobless claims.

The week concludes Friday morning with retail sales, consumer sentiment, along with earnings from BAC, Wells Fargo (NYSE: WFC), and PNC Financial (NYSE: PNC).


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1. Reuters: Hurricanes Harvey, Irma lift U.S. factory activity index to 13-year high. 10/2/17. RTTNews: U.S. Service Sector Growth Jumps To Twelve-Year High In September. 10/4/17.

2. Bloomberg: Beneath Hurricane-Hit Payrolls, U.S. Labor Market Shows Strength. 10/6/17. CNBC: The Fed just got what it was looking for to satisfy its 'hawkish bent'. 10/6/17.

3. Marketwatch: GM, Ford, Toyota post sharp Sept. sales gains. 10/3/17.

4. Reuters: Delta shares soar on September, post-hurricane operating results. 10/3/17.

5. Reuters: Mylan surges, Teva slumps after FDA approves Copaxone copy. 10/4/17.

6. CNBC: PA attorney general says 'deceptive' Navient took $4 billion out of student loan holders' pockets. 10/5/17.