As earnings season kicks off, stocks are on a roll.
The benchmark S&P 500 is set to post its fifth straight weekly gain and is hovering near a fresh record high after rising over 21% this year.
Driving the gains is a string of encouraging economic data that have all but dispelled the slowdown fears that rocked markets over the summer. Among these was a blowout jobs report earlier this month, the latest sign that the economy is maintaining solid growth as the Federal Reserve cuts interest rates-a historically potent combination for stock market gains.
“For the most part, the majority of the economic data stream has been positive,” said Art Hogan, chief market strategist at B Riley Wealth. “Hopefully that gets confirmation with some of the more consumer-facing companies that are reporting next week.” Earnings from American Express, Netflix, United Airlines, Procter & Gamble and several major banks will give a broad view of consumer spending, which accounts for more than two-thirds of US economic activity.
Retail sales data is expected on October 17. Shares of JPMorgan Chase and Wells Fargo jumped as earnings season got into gear on Friday, after both lenders surpassed estimates.Expectations have firmed that the economy will avoid a downturn despite a long period of elevated interest rates. Goldman Sachs, for example, lowered the odds of a US recession in the next 12 months by five percentage points to 15% following the employment data. Robust data has supported that view. In addition to jobs, reports on consumer prices and the services sector suggest that fears of a rapidly weakening economywere overblown.