Weekly Recap - Week ending 16-Oct-09

All ten of the sectors gained, with the advance led by energy companies (+5.2%) and materials (+2.2%).  Telecom (+0.1%) and consumer staples (+0.2%) underperformed on a relative basis.

Earnings were in focus throughout the week, with added attention on how the market would respond to revenue misses. The market in aggregate had a positive reaction to several earnings beats, though it is clear that expectations have been raised as shares of GE (GE) and IBM (IBM) tumbled after their quarterly results.

Earnings got off to a strong start, with JPMorgan Chase (JPM) reporting a hefty earnings beat, with Q3 EPS coming in at $0.82 versus the $0.51 consensus.

Goldman Sachs (GS) and Citigroup (C) reported earnings the next day, both topping estimates.  But both shares came under a pressure in a "sell-the-news" trade. Later, Bank of America (BAC) broke the trend of upside earnings surprises from the major banks, posting Q3 EPS of -$0.26 per share versus expectations of -$0.20. Banks continue to be hampered by increasing credit losses.

In a similar fashion, shares of both IBM and GE fell despite EPS beats.  IBM's disappointment came due to relatively weak services orders, while GE's revenue was well short of expectations ($37.8 billion versus $39.5 billion).

There were some reports that the market liked, however. Google (GOOG) bested its consensus EPS ($5.89 versus $5.42 consensus), and seemed more upbeat about the economic outlook.

After earnings, a major driver of trade was commodities and the dollar.  The dollar tumbled to a fresh 52-week low at 75.21, giving a lift to commodities (+5.2%).  As a result, gold hit an all-time nominal high of $1070.20 per ounce, and oil surged to the highest levels in 2009 at $78.75 per barrel.  Crude prices also benefited by a smaller-than-expected increase in inventory levels.  In turn, energy and commodity companies outperformed, with oil & gas equipment & services surging 7.8%.

Economic data had a modest impact on the market this week.  Retail sales surprised to the upside with a softer-than-expected decline of 1.5% versus the -2.1% consensus. Excluding autos, retail sales increased a better-than-expected 0.5% versus the +0.2% consensus.

Initial jobless claims for the week ending Oct. 10 totaled 514,000, which was a bit below the consensus forecast of 520,000 initial claims and down 10,000 from the previous week. Continuing claims slipped below 6.0 million for the first time since March by coming in at 5.99 million. The consensus called for an even 6.00 million continuing claims.

The Empire State Manufacturing Index for October came in at 34.57, which topped the 17.25 consensus, which gave the stock market a boost.

Earnings will remain in focus in the upcoming week, with added attention placed to companies' top lines and commentary regarding the economic outlook.

Index	Started Week	Ended Week	Change	% Change	YTD %
DJIA	9864.94	9995.91	130.97	1.3	13.9
Nasdaq	2139.28	2156.60	17.32	0.8	36.8
S&P 500	1071.49	1087.68	16.19	1.5	20.4
Russell 2000	614.92	616.18	1.26	0.2	23.4