Stocks continued to climb a wall of worry Friday, with market participants undeterred by rising Treasury yields and higher oil prices. A dreary reading on consumer sentiment didn’t change today’s positive trajectory, either, with Wall Street hopeful for another strong corporate earnings season.
At the close, the blue-chip Dow Jones Industrial Average was up 0.8% at 51,654, the broader S&P 500 was 0.6% higher at 7,811, and the tech-heavy Nasdaq Composite added 0.6% to 27,366. All three equity benchmarks closed higher on the week, too.
Friday’s positive finish came even as yields on the 2-year (+3.3 basis points to 4.793%) and 10-year (+1.1 basis points to 5.244%) Treasuries resumed their march higher.
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Oil prices gained, too, with front-month West Texas Intermediate crude futures climbing 0.4% to settle at $91.85 per barrel. Rising energy costs are expected to keep price pressures elevated. We’ll get the latest inflation updates next week, starting with Wednesday morning’s release of the September Consumer Price Index (CPI).
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The wall of worry is “getting taller,” says Bob Edwards, chief investment officer at Edwards Asset Management, but “investors may be focusing too heavily on rising bond yields and geopolitical uncertainty while overlooking the extraordinary strength of corporate earnings.”
Earnings season gets rolling next week with several blue chip and financial stocks set to report. “Third-quarter S&P 500 earnings growth year-over-year is expected to approach 30%,” notes Edwards, “and the start of earnings season in the coming days will act as a much-needed reminder for just how good the earnings picture is.”
Consumer sentiment keeps sliding
Consumer sentiment continued to decline in October. The University of Michigan’s preliminary Consumer Sentiment Index fell 3.7% month over month to 46.3 — its second-lowest reading on record.
“Frustration over cost-of-living continues to mount, as consumers across the political spectrum believe that the trajectory of the economy has weakened since the beginning of the year,” says Surveys of Consumers Director Joanne Hsu.
This could also affect the midterm elections, says Jim Baird, chief investment officer with Plante Moran Financial Advisors. “Consumers across the political spectrum are frustrated with rising prices and a sense of treading water financially,” Baird explains. “It may not be readily apparent in headline GDP data, but it’s likely to be very apparent as voters cast their ballots in the coming weeks.”
In single-stock news, AT&T (T, -9.8%), T-Mobile US (TMUS, -13.3%) and Verizon Communications (VZ, -8.8%) were three of the biggest decliners Friday after SpaceX (SPCX, +1.3%) on Thursday said it is buying a nationwide low-band spectrum license portfolio.
The purchase puts Elon Musk‘s space exploration and artificial intelligence (AI) company one step closer to its Starlink Mobile segment becoming “a major mobile carrier in the U.S.”
UBS Global Research analyst John Hodulik says “this is the most tangible step SpaceX has taken to date to build out the stack required to offer a proper Mobile network.” However, he believes today’s telecom sell-off is “a knee-jerk reaction” given the potential for what is likely to be a lengthy buildout.
While telecom stocks suffered on the SpaceX news, wireless tower providers including American Tower (AMT, +9.3%) and Crown Castle (CCI, +15.6%), soared.
Delta posts a rare earnings miss on higher fuel costs
Delta Air Lines (DAL) closed marginally higher Friday, after the air carrier reported earnings of $1.72 per share, up 0.6% year over year and below analysts’ estimate of $1.76. This marked Delta’s first bottom-line miss since Q3 2024 and was due to fuel costs coming in $500 million more than expected.
The company also cut its full-year forecast to reflect higher fuel costs.
Still, demand remains high, with Delta reporting year-over-year revenue growth of 21% to $20.2 billion, more than analysts expected.
And Wall Street remains overwhelmingly bullish toward the blue chip stock. Of the 25 analysts covering DAL who are tracked by S&P Global Market Intelligence, 24 say it’s a Buy or Strong Buy vs one that has it at Sell. Plus, the average price target of $101.48 represents implied upside of 24% to current levels.