Market week: Stocks float on strong earnings

Market week: Stocks float on strong earnings

Financials, energy issues lead gains


Major North American stock market indexes posted solid weekly gains, as strong U.S. retail sales in September, along with a rebounding energy sector and healthy bank earnings, contributed to a revival in bullish investor sentiment.

U.S. retail sales rose 0.7% month over month in September (13.9% year over year), propelled by a release of pent-up demand as the economy opens up. This despite the steadily rising consumer price index (5.4% annual rate in September), led by an annualized 24.8% increase in energy prices, directly benefitting the energy majors.

Strong quarterly bank earnings also buoyed investor sentiment, as Morgan Stanley, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs all beat street estimates. In Canada, the big six, Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank, Royal Bank of Canada, and Toronto-Dominion Bank, all reported better-than-expected quarterly earnings results.

The S&P 500 Composite Index gained 1.8% on the week as a result, while the Nasdaq Composite Index advanced 2.2%. Toronto’s S&P/TSX Composite Index also put on a show, climbing 2.5% on the week, supported by a 3.7% gain in the energy sector as crude oil also rose 3.7% on the week. Gold, meanwhile, edged up 0.6% on the week, as traders continue to focus on economic growth and employment gains, rather than persistent increases in the inflation rate.

Fund news

* RBC expands lineup of Index ETF funds. RBC Global Asset Management announced on Oct. 13 that it will be expanding its lineup of index-based funds effective Jan. 24, 2022, with the addition of five new RBC Index ETF Funds. Each fund will invest in one or more iShares ETFs, as follows:

RBC Global Bond Index ETF Fund will hold 40% iShares Core U.S. Aggregate Bond ETF (NYSE: AGG) and 60% iShares Core International Aggregate Bond ETF (BZX: IAGG) plus currency hedging.

RBC Canadian Equity Index ETF Fund will invest in iShares Core S&P/TSX Capped Composite Index ETF (TSX: XIC).

RBC U.S. Equity Index ETF Fund will invest in iShares Core S&P 500 ETF (NYSE: IVV).

RBC Global Equity Index ETF Fund will hold iShares MSCI World ETF (NYSE: URTH).

RBC Emerging Market Equity Index ETF Fund will invest in iShares Core MSCI Emerging Markets ETF (NYSE: IEMG).

In addition, the following funds will be renamed effective Jan. 24, 2022:

RBC Canadian Bond Index Fund will be renamed RBC Canadian Bond Index ETF Fund.

RBC U.S. Index Currency Neutral Fund will be renamed RBC U.S. Equity Currency Neutral Index ETF Fund.

RBC International Index Currency Neutral Fund will be renamed RBC International Equity Currency Neutral Index ETF Fund.

* Purpose launches mutual fund versions of its cryptocurrency ETFs. Purpose Investments on Oct. 13 debuted mutual fund units for its cryptocurrency funds: Purpose Bitcoin ETF (TSX: BTCC) and Purpose Ether ETF (TSX: ETHH), which are backed by physically-settled Bitcoin and Ether, respectively. Mutual fund units are available in A and F series, in both Canadian and U.S. dollars, in hedged and non-hedged versions.

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