#Market Snapshot: Dow closes above 35,000, stocks book second straight week of gains after retail sales beat expectations

All three major U.S. stock-market benchmarks posted a second straight week of gains. The Dow saw a weekly gain of 1.6%, while the S&P 500 advanced 1.8% and the Nasdaq rose 2.2%.

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What drove the market?

U.S. stock investors maintained a bullish stance Friday after a report on September retail sales indicated that Americans are spending enough money to sustain an economic recovery from the pandemic, even if consumers are paying more to do so.

Retail sales climbed 0.7% last month, the government said Friday. Economists polled by The Wall Street Journal had forecast a 0.2% decline.

“That’s a big surprise,” said Jim Smigiel, chief investment officer at SEI, in a phone interview Friday. After the spread of the delta variant of the coronavirus led to a rise in COVID-19 cases, “people are ready to get back in the mix and they’re doing that voting with their dollars,” he said.

While sales rose in most major categories last month, consumer sentiment in October has slipped. A reading of consumer sentiment from the University of Michigan fell to 71.4 this month, from 72.8 in September.

“Consumer sentiment dropped again, and the survey pointed to many worries on consumers’ minds that will continue to dim the pace of consumer spending into 2022,” wrote Robert Frick, corporate economist with Navy Federal Credit Union, in a daily note. However, he said that the jump in consumer spending and an increase in savings were mitigating factors to the dour outlook held by many Americans.

“The concerns are real, but so is the excess $1 trillion saved from stimulus and lack of spending during the shutdown, and so is the pent-up demand to spend across the board as the economy reopens,” Frick wrote.

Stock indexes have been trending up as Wall Street cheers a batch of third-quarter earnings reports that are beating expectations, including those from banks Morgan Stanley
MS,
+1.12%,
Bank of America
BAC,
+2.88%,
Citigroup
C,
+2.10%
and Wells Fargo
WFC,
+6.78%.

On Friday, Goldman Sachs
GS,
+3.80%
reported third-quarter net income of $5.28 billion, or $14.93 a share, compared with $3.23 billion, or $8.98 a share, in the year-ago period. Goldman’s stock rose 3.8% Friday, with the Dow component’s rally helping to buoy the price-weighted index.

Banks are viewed as bellwethers of economic health so their outperformance and outlooks from executives can embolden optimistic investors.

“The big macro theme is the reopening of the economy,” said Smigiel. “We’re seeing a reflection of increased activity.”

Next week will see a number of big names reporting across several sectors, including Johnson & Johnson
JNJ,
+0.74%,
Netflix
NFLX,
-0.87%,
Tesla
TSLA,
+3.02%,
Intel
INTC,
+1.04%
and Chipotle Mexican Grill
CMG,
-0.53%.

“There’s quite a long runway for the U.S. economy,” said Shawn Snyder, head of investment strategy at Citigroup’s U.S. consumer wealth management division, in a phone interview Friday. “It should continue to grow for the next couple of years.”

Which companies were in focus?

• Shares of Alcoa Corp.
  AA,
  +15.23%
  soared 15.2% Friday after the aluminum producer reported stronger-than-expected results, said it would pay its first dividend since 2016 and announced a $500 million share buyback.

• Virgin Galactic Inc.
  SPCE,
  -16.83%
  shares plunged 16.8% after delaying its next test flight and the start of its space-tourism business.

• Shares of Charles Schwab Corp. SCHW rose 3.6% to another record Friday, after the discount broker reported third-quarter profit and revenue that rose above expectations, as continued bullish investor sentiment helped produce a fivefold increase in trading revenue. 

• Shares of Prologis Inc. PLD increased 0.9% after the real-estate investment trust focused on leasing logistics facilities reported third-quarter earnings that rose above expectations, and boosted its full-year outlook, amid record increases in market rents and valuations. 

How did other assets trade?

• The 10-year Treasury yield
  TMUBMUSD10Y,
  1.576%
  rose almost 6 basis points to 1.574% Friday, but was still down 3 basis points for the week. Yields and debt prices move in opposite directions.

• Oil futures finished higher, with the U.S. benchmark
  CL00,
  +1.33%
  rising 1.2% to settle at $82.28 a barrel. Gold futures
  GC00,
  -1.68%
  ended lower Friday, falling nearly 1.7% to settle at $1,768.30 an ounce. For the week, gold gained 0.6%.

• The Stoxx Europe 600
  SXXP,
  +0.74%
  closed 0.7% higher for a weekly gain of 2.65%, while London’s FTSE 100
  UKX,
  +0.37%
  rose 0.4% Friday to advance 2% this week.

• The Shanghai Composite
  SHCOMP,
  +0.40%
  closed 0.4% higher Friday, but fell 0.6% for the week. Japan’s Nikkei 225
  NIK,
  +1.81%
  advanced 1.8% Friday for a weekly gain of 3.6%.

—Barbara Kollmeyer contributed to this article.