Weekly Market Recap: Oct. 11, 2021

The week in review

• Unemployment rate decreased to 4.8%
• Durable orders: +1.8% (m/m)
• Hourly earnings: +0.60% (m/m)

The week ahead

• NFIB survey
• JOLTS
• Retail sales
• Consumer sentiment

Thought of the week

With 4.6% of market cap reporting, our current estimate for Q3 2021 S&P 500 operating earnings per share (EPS) is $48.25 ($40.42 ex-financials). This represents EPS growth of 27.3% from a year prior, and 21.2% since 3Q19. However, on a sequential basis, estimates point to an earnings contraction of 7.3% q/q. The projected slowdown in quarterly growth can be attributed to macro headwinds such as the spread of the delta variant, supply chain disruptions, slower economic growth and rising wages. That said, the average price of oil increased 73.4% during the quarter and the U.S. dollar declined by 1.4%, both of which should help support earnings.

At the sector level, energy, materials and industrials are projected to lead the way, while financial profits look to have declined. Health care is expected to see earnings rise 37.2% y/y, and technology and communication services should also post solid gains. Although current estimates are showing an earnings decline relative to the second quarter, on average analysts tend to underestimate earnings by 5.3% at the start of the quarter. As such, earnings may surprise to the upside, supporting equity markets against a backdrop of higher volatility.

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Unless otherwise stated, all data is as of October 11, 2021 or as of most recently available.