Our Services
Who We Are
Client Tools
News & Info
Financial Briefs
  Articles Of Interest
  Featured News
Account Lookup
Advisor Vault
Custom Page Types
Contact Us
Log In
More Articles  Printer Friendly Version


Financial Economic Outlook

4969 2

The stock market closed at a new record high again on positive economic fundamentals, better than expected corporate earnings reports and a bright earnings outlook. Key economic statistics released this past week indicate further profit growth is just ahead.

4969 3

Friday morning, the Bureau of Labor Statistics reported that 531,000 new jobs were created in October, much more than the 435,000 expected by Wall Street.

Last month, the same report on new-job formation in September, was a negative surprise.

New-job formation is always a volatile monthly statistic, and the pandemic has made it even less predictable, as is shown in this chart.

On top of the better-than-expected new-jobs number reported for October, Friday’s BLS release included an upward revision of last month’s disappointing numbers.

4969 4

This chart of purchase orders made by service sector companies surged past its previous record high in October.

Services account for 89% of economic activity in the U.S and create 91% of non-farm jobs, which is why we share its current signal here regularly.

The ISM Service Purchasing Managers Index soared from 61.9% to 66.7%, a big move from already lofty heights by historical standards.

4969 5

The green line in this chart represents the history of earnings projections by Wall Street analysts for the third quarter of 2021. Earnings projections for the third quarter of the year soared in recent weeks. Actual earnings for the quarter have been reported by companies in the last few weeks. About 80% of the Standard & Poor’s 500 have reportedly reported their third-quarter earnings. The surge in earnings can be expected to be topped in the fourth quarter of 2021 because the economy is expected to grow by 4.8% versus a 2% growth rate in the third quarter.

To be clear, corporate earnings are driven by growth in the economy. The economy grew at a slow 2% rate in the third quarter of 2021, but the consensus forecast of economists is for a 4.8% growth rate in the fourth quarter. Thus, it is reasonable to expect earnings growth in the fourth quarter will be higher than in the third quarter. While economic growth drives earnings, earnings growth drive stock prices, which explains today’s closing record high in the S&P 500 stock index.

4969 6

The Standard & Poor’s 500 index closed this Friday at an all-time high for the second week in a row. At 4,697.53, the index gained +0.37% from Thursday and +1.98% from last week. The index is up +70.94% from the March 23, 2020, bear market low.

Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.

Email this article to a friend

Should You Care About Wall Street Stock Market Predictions?
Weekly Economic Update For Investors
Despite Pandemic, Stocks Closed 2021 With A 26.9% Return
Tracking The Economic Boom
Fed Changes Its Inflation Stance
Despite Inflation And Omicron, A Booming Economy
The Week's Financial News: Crosscurrents In The Economy
After Breaking Records For Six Weeks, Stocks Dropped -2.3% Friday
Already Higher Than Ever, Leading Economic Index Surged Again In October
Five Observations For Investment Planning For The Decades Ahead
S&P 500 Closed Friday At Record High Again On Strong Earnings Reports
With Economic Recovery Intact, Stocks Are Near Record Again
Are The Five Stocks Driving The Market's Great Returns Overvalued?
Despite Gloomy Jobs Report, The Economic Outlook Remains Bright
S&P 500 Rebounded Today After A Difficult Week And Month

This article was written by a professional financial journalist for Financial Planners and is not intended as legal or investment advice.

©2022 Advisor Products Inc. All Rights Reserved.
test disclosure 123