Stock Market Overview for October 21, 2024

On Friday, Wall Street wrapped up trading on a positive note, primarily influenced by the performance of technology stocks. The overall investor sentiment improved, bolstered by solid earnings reports, while a decline in energy prices helped balance market activity.

Performance of Major Indices

The Dow Jones Industrial Average (DJI) gained 36.86 points, equivalent to 0.1%, closing the day at 43,275.91. Out of the 30 companies in this index, 19 reported gains, 10 experienced losses, and one remained unchanged.

The technology-focused Nasdaq Composite saw an increase of 115.94 points or 0.6%, closing at 18,489.55.

Meanwhile, the S&P 500 improved by 23.20 points, or 0.4%, finishing at 5,864.67. Ten of the eleven sectors within this index closed positively. Notably, the Communication Services Select Sector SPDR (XLC), the Real Estate Select Sector SPDR (XLRE), and the Utilities Select Sector SPDR (XLU) each rose by 0.7%, 0.7%, and 0.6%, respectively, while the Energy Select Sector SPDR (XLE) declined by 0.3%.

The volatility index, CBOE Volatility Index (VIX), showed a decrease of 5.7%, closing at 18.03. In total, 10.6 billion shares were traded on Friday, slightly above the average trading volume of the last 20 sessions at 11.6 billion shares.

Highlighting Netflix's Earnings

Netflix, Inc. (NFLX) was a standout performer on Friday, with its shares rising by 11.1% following the release of strong third-quarter earnings late Thursday. The streaming service exceeded both earning and revenue forecasts, reporting earnings of $5.40 per share, surpassing the anticipated $5.09. Additionally, its revenue reached $9.82 billion, which exceeded the projected $9.76 billion.

The surge in Netflix's user base, particularly due to its ad-supported membership tier, which grew by 35%, significantly contributed to its performance. The company also provided a positive outlook for the following quarter, predicting a revenue increase of 14.7% to $10.13 billion, and estimates revenues to fall between $43 billion and $44 billion for 2025, marking an 11% to 13% growth compared to the expected $38.9 billion in revenues for 2024.

Netflix’s performance notably boosted the communication services sector and had a ripple effect on the broader technology sector, with most of the "Magnificent Seven" tech stocks also seeing gains.

Shares of Ericsson (ERIC) and Apple Inc. (AAPL) increased by 2.7% and 1.2%, respectively. Ericsson has a Zacks Rank of #2 (Buy).

Oil Prices See a Downward Trend

On the commodities front, oil prices continued to fall, reflecting a more than 7% decline over the week amid concerns surrounding demand from China and ongoing geopolitical issues in the Middle East.

Brent crude oil dropped by $1.39, or 1.87%, pricing at $73.06 per barrel, while WTI crude saw a decline of $1.45, or 2.05%, ending at $69.22 per barrel.

Summary of the Week

Week-on-week, the Nasdaq Composite, the S&P 500, and the Dow Jones Industrial Average all experienced gains of 0.8%, 0.9%, and 1%, respectively, marking the sixth consecutive week of upward movement for these key indices.

Economic Indicators

Recent data from the U.S. Census Bureau and the Department of Housing and Urban Development reported that September's building permits came in at 1,428,000, a decline of 2.9% from the revised August figure of 1,470,000. Furthermore, housing starts for September were reported at 1,354,000, which is also down by 0.5% compared to the revised August estimate of 1,361,000.

WallStreet, Tech, Earnings