Daily Capital

Stocks Post Best Gains of 2014

Market Digest – Week Ending 10/24

US stocks posted their best week of the year, driven by solid earnings and expectations of more significant asset purchases by the European Central Bank. An Ebola case reported Thursday night in New York was largely overlooked as investors gained confident the virus can be contained. Apple and Microsoft each exceeded earnings expectations on robust iPhone 6 and cloud services, respectively. Amazon, McDonalds, Coca-Cola, AT&T and IBM were among major companies that disappointed.

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Weekly Returns:

S&P 500: 1,965 (+4.1%)
FTSE All-World ex-US: (+2.3%)
US 10 Year Treasury Yield: 2.27% (+0.07%)
Gold: $1,238 (+1.2%)
USD/EUR: $1.267 (-0.7%)

Major Events:                 

  • Monday – Apple reported a 13% increase in earnings and predicted a record holiday season.
  • Monday – The US dropped supplies and weapons to Syrian Kurds fighting Islamic State extremists in Kobani.
  • Tuesday – The ECB said it is considering purchases of corporate bonds as one option to stimulate the economy. Stocks rallied on the news.
  • Tuesday – The US said it will restrict flights from West African nations struggling with the Ebola virus to five arrival airports.
  • Wednesday – A man who converted to become a Islamic extremist shot and killed a soldier at Canada’s War Memorial before being killed in the Parliament building.
  • Friday – Proctor & Gamble announced it would spin-off its Duracell battery unit.

Our take:

Earnings have been generally good. With about 40% of the S&P 500 reporting earnings so far, 75% have beat earnings expectations and 60% topped sales estimates. Estimates tend to be conservative, so these numbers represent solid, but not spectacular results. At the end of the day, earnings are growing, and that means stock prices can also increase.

Markets love to prove people wrong. While this week’s rally surprised many, we saw very little panic selling during the declines in the first half of October. Complacency remains, but greed is absent. In our view, all of this combines for a relatively neutral short term outlook for stocks.


The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Craig Birk, CFP®
Craig Birk leads the Personal Capital Advisors Investment Committee and serves as Chief Investment Officer. His focus is translating improvements in technology into better financial lives. Craig has been widely quoted in the Wall Street Journal, Bloomberg, CNN Money, the Washington Post and elsewhere. Prior to Personal Capital Advisors, he was a leader within the portfolio management team at Fisher Investments, helping assets under management grow from $1.5 billion to over $40 billion. Craig graduated from the University of California at San Diego and has earned the Certified Financial Planner® designation.

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