Earnings reports are not being well received - Creand
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Earnings reports are not being well received

It was a tough week for the market. At the start of last week, the S&P 500 fell below its 200-day moving average. By the end of the week, the S&P 500 settled 10.3% lower than the July 31 closing high (which is a market correction) and tested support near the 4,100 level.  Geopolitical angst contributed to the overall negative bias throughout the week, but tensions peaked on Friday following reports that the US carried out airstrikes against Iranian backed targets in Syria. Separate reports indicated that Israel is expanding ground operations in Gaza.   

Many stocks participated in a broad retreat. The Invesco S&P 500 Equal Weight ETF (RSP) and the market-cap weighted S&P 500 each fell 2.5% this week. Only one of the 11 S&P 500 sectors logged a gain (utilities +1.2%), while the communication services (-6.3%) and energy (-6.2%) sectors saw the largest declines.  Weakness in the communication services sector was driven by Alphabet (GOOG), which logged a 9.8% decline on the week after an earnings report that contained some relatively disappointing growth for its cloud business, and Meta Platforms (META), which fell 3.9% following its earnings report. Microsoft (MSFT) initially moved higher following its report but gave back the gains before the end of the week.  Amazon.com (AMZN) was the exception as it managed to hold on to its gains following its report.  There were several other large cap companies that reported well with Verizon (VZ), Coca-Cola (KO), Dow (DOW), RTX (RTX), General Electric (GE), and 3M (MMM) being among the standouts in that respect.  However, it was not enough to stem the market’s losses.

In political news, Representative Mike Johnson (R-LA) was elected Speaker of the House after receiving unanimous support from the Republican Party.  Johnson stated he would work towards extending the government’s budget until at least January 15th.  The budget is currently set to expire on November 15th.