In my last commentary two weeks ago I noted the close of the S&P 500 at 1,131. We saw the market close at 1,224 today. This is above the 1,120-1,210 range we have seen since August. Much of the reason for the recent uptick in the market is third quarter earnings. The bulk of reports will be released in the second half of the month of October. However, some companies are releasing third quarter earnings now. The financial sector reports are coming in with lackluster figures, but this was widely expected. Google made a splash in the business world today with the release of a 26% increase in earnings and 37% increase in revenue for the third quarter. Apple posted record quarterly revenue. Mattel came in better than expected with a 6.2% gain in earnings. PepsiCo also released better than expected figures for the quarter.
These companies are just a few that have released third quarter figures, but show better than expected profits across a wide range of sectors. As I have been mentioning for some time now, corporations are making money. The volatility in the stock market we have seen this summer has been driven in part by emotional responses to European events that have little to do with the actual financial picture of most U.S. corporations. The market drop we saw in the fall of 2008 took place in the context of lowered corporate earnings. How significant of an earnings drop was to be seen was a large unknown at that time. The current situation of rising corporate earnings clearly differs from the situation seen in 2008. Most economists do not feel we are going to have a double dip in the U.S. economy and the upcoming earnings reports are likely to reinforce this view. I would note that one of the more respected market technicians (a specialized market analyst) I subscribe to does think we have seen the lows of the current market. I will give you additional information regarding further earnings releases as they come in over the next two weeks.
I would note that account values have fluctuated greatly from day-to-day during the past few weeks. The monthly statement(s) you are receiving now were generated on September 30th and are dated. Should these statements be generated today, you would likely see meaningfully higher account values given the market rise since the end of last month.