The S&P 500 index rose 1.2% last week as the consumer staples and utilities sectors led a broad climb ahead of the start of Q3 earnings season.
The S&P 500 ended Friday's session at 7,811.54. The index is up 2.1% for the month and up 14% for the year.
US consumer sentiment fell in October as the one- and five-year inflation expectations reached their highest levels since May, preliminary results of a University of Michigan survey showed Friday.
The CME FedWatch tool showed the probability of the Federal Reserve leaving its target rate unchanged in October was 81% on Friday afternoon. Still, the market sees a 71% likelihood that the Fed will raise its target rate by 25 basis points in December and assigns a 45% probability of another quarter-point move higher in March to ease inflation back to the Fed's 2% target.
On 10/7, the 10-year Treasury yield briefly climbed to a 24-year high of 5.36% as oil topped $100 a barrel and reignited inflation concerns. Yields later eased as oil prices fell and a strong $39 billion Treasury auction showed investors still had an appetite for government debt. The auction drew stronger-than-usual demand, suggesting higher yields may be starting to entice buyers despite recent market volatility
All but two of the S&P 500's sectors rose last week. Consumer staples led the climb, up 4%, followed by a 3.9% increase in utilities, a 3.6% gain in energy and a 3.1% rise in consumer discretionary. Health care was also strong, up 2.8%, followed by a 2.3% gain in financials. Real estate, materials and communication services also rose.
The Q3 earnings season will kick off this week. Quarterly reports are expected from a number of financial companies including JPMorgan Chase, Goldman Sachs Group, Wells Fargo, Citigroup, Bank of America, Morgan Stanley, BlackRock and Charles Schwab. Other companies expected to release quarterly results next week include Johnson & Johnson and UnitedHealth.
Economic data will include the September consumer price index, the producer price index, September retail sales, industrial production and capacity utilization.
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