ROBARE & JONES ON THE MARKETS
The S&P 500 rose 1.6% this past week and reached fresh record highs amid better-than-expected Q3 corporate earnings and positive economic data. With just one trading week left in the month, the S&P 500 is now up 5.5% for October to date. It is up 21% for the year to date.
The weekly climb came as many US companies' Q3 earnings reports surpassed analysts' expectations. In addition, weekly jobless claims fell to fresh pandemic lows while US existing home sales rose 7% in September.
All but one of the S&P 500's sectors rose this past week. Real estate had the largest percentage increase of the week, up 3.2%, followed by a 2.9% gain in health care and a 2.8% rise in financials. The one sector in the red was communication services, down 0.6%.
This week look for earnings reports from Kimberly-Clark (KMB), Facebook (FB), 3M (MMM), General Electric (GE), Boeing (BA) and Merck (MRK). Also stay tuned for September consumer spending report and September core inflation numbers to be released.
Let's take a look at the markets from this past week!
The Bond Market's Bull Run!
The bull market in bonds has persisted for 40 years. In September 1981, the interest rate on 10-year U.S. Treasury bonds was 15.8 percent. In 2020, the interest rate bottomed at 0.52 percent and has moved higher. Whether the bull market ends or continues, it’s important for investors to know bond basics. Test your knowledge of bonds by taking this brief quiz.
- In general, a bond is:
- A loan that an investor makes to a company, a government, or another organization
- An investment that pays a specific amount of interest over a set period of time
- An investment that is expected to return an investor’s principal at maturity
- All of the above
- If interest rates rise, what will typically happen to bond prices?
- Prices rise
- Prices fall
- Prices remain stable
- There is no relationship between interest rates and bond prices.
- Bonds are called many different names. Which of the following is not an alternative name for bonds?
- Fixed income
- Debt securities
- The interest rate on floating-rate notes adjusts as rates change. When might it be advantageous to have these bond investments in a portfolio?
- When interest rates fall
- When interest rates rise