Week in Review: November 5, 2021

Markets enjoyed a strong week, with the S&P 500 ending at a new record high, propelled by strong earnings reports, upbeat economic data, positive COVID news, and no surprises from the U. S. Federal Reserve following their November meeting.

As expected the Fed officially announced their tapering plans, indicating that they will begin reducing their bond purchases by $15B/month; $10B of Treasuries, and $5B of Mortgage-Backed Securities (MBS). At that pace, tapering would conclude by June 2022. On the topic of inflation, the Fed stated that the forces behind inflation, “are expected to be transitory.” That marked a subtle change from the prior meeting’s statement that characterized the forces simply as “transitory.”  Across the pond, the Bank of England held off on raising interest rates, helping drive global rates lower for the week.

The CDC officially approved Pfizer’s COVID-19 vaccine for children ages five to 11. In addition, the company announced that its experimental pill cut hospitalizations and death rates in high-risk adults by 90%.

On Friday, the House of Representatives passed the $1T infrastructure bill that had previously been passed by the Senate. The bill will provide funding for bridges, roads, transit systems, broadband internet, and other initiatives.

Through Friday, 89% of S&P 500 companies had reported 3Q21 earnings. Thus far, 81% of reporting companies have exceeded their consensus estimates.  According to industry group Factset, aggregate earnings growth for the quarter is expected to be 39%, up from the initial estimate of 28%.