The Week on Wall Street
Stocks rallied last week on a stream of positive corporate earnings surprises.
The Dow Jones Industrial Average rose 1.08%, while the S&P 500 advanced 1.64%. The Nasdaq Composite index gained 1.29% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, was up 0.23%.
FACT OF THE WEEK
Pablo Picasso, one of the greatest and most influential artists of the 20th century, was born on October 25, 1881 in Malaga, Spain.
Picasso’s father was a professor of drawing, and he bred his son for a career in academic art. Picasso had his first exhibit at age 13 and later quit art school so he could experiment full-time with modern art styles. He went to Paris for the first time in 1900, and in 1901 was given an exhibition at a gallery on Paris’ rue Lafitte, a street known for its prestigious art galleries. The precocious 19-year-old Spaniard was at the time a relative unknown outside Barcelona, but he had already produced hundreds of paintings. Winning favorable reviews, he stayed in Paris for the rest of the year and later returned to the city to settle permanently. The work of Picasso comprises more than 50,000 paintings, drawings, engravings, sculptures, and ceramics produced over 80 years.
Earnings Ignite Rally
Fears over inflation, supply shortages, and slowing economic growth in China were pushed aside last week as investors reacted to a daily succession of positive corporate earnings surprises. After the Dow Industrials reached an all-time high intraday on Wednesday, fresh earnings reports, an increase in existing home sales, and a new pandemic low in initial jobless claims - and continuing claims - propelled the S&P 500 index to a new record high the following session.
Disappointing earnings before the market opened on Friday hurt a few social media stocks, resulting in a choppy trading session and a selloff in the Nasdaq to close out the week.
Solid Start To Season
Investors came into the earnings season anxious about whether businesses could extend the earnings growth momentum of recent quarters amid an increase in Delta infections, inflation, labor shortages, and supply-chain bottlenecks. The early results were encouraging. Of the 23% of companies comprising the S&P 500 index that have reported, 84% beat Wall Street consensus earnings estimates by an average of more than 13%.
The earnings season may get more uneven in coming weeks since many of the companies potentially affected by labor shortages and inflation have yet to report. Nevertheless, these better-than-expected earnings buoyed investor spirits and allowed stocks to build on their October gains.
FINANCIAL STRATEGY OF THE WEEK
One collateral effect of the Covid-19 pandemic might be the protection offered by your homeowner’s insurance.
You’re no doubt aware that two consequences of the pandemic are increased demand for homes and shortages of many building components and supplies. Skilled labor to build homes also is in short supply.
The result is that the cost of building a home increased. The increase has been dramatic in some areas. That means the cost of rebuilding or substantial repairing your home due to a casualty loss probably increased.
You need to review the coverage limits in your insurance policy. Most policies say they will pay for the cost of rebuilding the home if it is destroyed. But there’s usually a maximum amount the insurance company will pay.
Many insurers automatically adjust the maximum each year when a policy is up for renewal. Others don’t.
In either case, you need to look at the limit in your policy and learn how much rebuilding costs have increased in your area. Determine how much it would cost to build your home in today’s market.
You’re likely to find that the maximum coverage limit in your policy is 20% or more below what it would cost to rebuild the home completely if it’s destroyed by a fire or other catastrophe. Adjusting the policy limit will increase your premiums a bit. But that will be less expensive than having to reach in your pocket to pay part of the cost of rebuilding the home.
As always, please let us know if there is anything we can help with along the way or any financial concerns you may have.
Have a great week!