Market Perspective for October 25, 2019

The S&P 500 Index challenged its all-time high on Friday. The index gained 1.19 percent for the week. The Nasdaq climbed 1.87 percent, the Russell 2000 advanced 1.55 percent and the Dow 0.66 percent.

Strong earnings boosted the technology sector. Intel (INTC) and Microsoft (MSFT) were among the large-cap tech companies that smashed earnings forecasts.  Intel rallied 9.96 percent for the week and Microsoft 2.47 percent. SPDR Technology (XLK) also climbed 2.47 percent.

SPDR Industrials (XLI) rose 2.17 percent this week and SPDR Financials (XLF) 1.96 percent. Caterpillar (CAT) reported slowing earnings growth, but its report was better than expected. Shares increased 6.93 percent. Financials extended their winning streak thanks to solid earnings from regional and smaller banks. SPDR S&P Regional Banking (KRE) rose 2.18 percent.

SPDR Energy (XLE) also gained on the week, increasing 4.37 percent. Halliburton (HAL) advanced 10.83 percent on strong earnings. Schlumberger (SLB) reported good earnings last week and added another 8.60 percent this week.

Existing home sales were strong and new home sales were on target at 701,000. The flash Markit PMIs for the manufacturing and service sectors showed the economy picking up in October. Consumer sentiment was solid in early October according to the University of Michigan survey. Weekly claims for unemployment held at multi-decade lows.

Bond yields fell this week and along with strong economic data, this boosted high-yield and floating-rate funds. Invesco Senior Loan (BKLN) rallied 0.49 percent and iShares iBoxx High Yield Corporate Bond (HYG) rose 0.34 percent. iShares Barclays 20+ Year Treasury (TLT) slipped 0.78 percent.

iShares MSCI Emerging Markets (EEM) advanced 1.79 percent this week. iShares MSCI EAFE saw a smaller increase of 1.12 percent. The U.S. Dollar Index climbed 0.64 percent. A near 1 percent drop in the British pound boosted the Dollar Index.

Among the companies beating earnings this week were Biogen (BIIB), Citrix Systems (CTXS), Verizon (VZ), Illinois Tool Works (ITW) and Phillips 66 (PSX). Biogen advanced thanks to progress on an Alzheimer’s drug. Shares advanced 30.91 percent. iShares Nasdaq Biotechnology (IBB) returned 3.13 percent. SPDR S&P Biotech (XBI) rose 3.43 percent.

Raytheon (RTN) climbed 6.21 percent this week on its earnings report. That helped lift shares of U.S. Aerospace & Defense (ITA) 1.06 percent.

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