US equity markets, as measured by the S&P 500 index, were flat last week as investors monitored initial third quarter earnings results from companies and tracked the progress toward additional fiscal stimulus from Washington. During the weekend, House Speaker, Nancy Pelosi, gave the White House until Tuesday to reach a deal with Democrats, and she has been in active discussions with Treasury Secretary, Steven Mnuchin, to work through areas of disagreement. Markets will be holding their collective breath early this week in the hopes of a potential new round of stimulus.
As of last Friday, 10% of S&P 500 companies have reported their third quarter earnings results, and nearly all have reported a positive earnings surprise thus far (results were better than analysts’ expectations). Consumer discretionary, energy, and financial companies have reported the most significant surprises in quarterly earnings thus far. For example, Darden Restaurants, the parent company of Olive Garden, reported significantly better revenue and earnings than expected, providing some evidence that businesses have been able to adapt to the constraints of the COVID-19 pandemic. This week, companies like Proctor & Gamble, Netflix, and Verizon will report results.
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