Stocks climbed Friday, bringing the S&P 500 within less than half a percent of its record as investors prepared for a week that will test whether corporate profits can keep growing despite expensive borrowing and oil above $100 a barrel.

The advance lifted portfolios heading into major bank earnings and fresh inflation figures. For households, those reports will also offer clues about a less comfortable part of the economy: how long pressure on loan payments and everyday expenses could persist.

The S&P 500 rose 0.59% to 7,811.54. The Dow Jones Industrial Average gained 423.31 points, or 0.83%, to 51,654.95, while the Nasdaq Composite added 0.64% to 27,366.17.

The S&P finished roughly 33 points below the 7,844.52 record it reached earlier in the week. A rise of about 0.42% would bring it back to that level.

All three benchmarks gained for the week. The S&P advanced about 1.2%, the Dow rose 0.9% and the Nasdaq added 0.6%. Smaller companies had a weaker showing: the Russell 2000 finished the week down about 0.9%, despite gaining Friday.

The next question is whether company results justify the market’s confidence. Analysts expect third-quarter earnings for S&P 500 companies to rise 30.6% from a year earlier, according to LSEG data reported by Reuters. That is a forecast, and companies’ comments about demand and costs could matter as much as the profits they report.

Bank earnings will provide some of the first evidence. JPMorgan Chase releases its results Tuesday, Oct. 13, with an investor call scheduled for 8:30 a.m. Eastern. Bank of America follows Wednesday, Oct. 14, releasing results at approximately 6:45 a.m. before its own morning call.

Investors will look beyond the headline profit numbers to lending, deposits and credit losses. Together, those measures can help show whether businesses are still borrowing to expand and whether households are keeping up with their debts.

Higher rates can help banks earn more on loans, but they can also increase funding costs and make repayment harder for customers. The balance between those effects will be central to understanding the results.

Borrowing costs remain a concern outside the stock market. The benchmark 10-year Treasury yield traded around 5.25% Friday after reaching its highest level since 2002 earlier in the week. Brent crude settled about 0.4% higher, near $104 a barrel, reversing an earlier decline.

Treasury yields influence the pricing of mortgages and other long-term borrowing, although lenders also account for their own costs and risks. Higher oil prices can raise fuel and shipping expenses, squeezing household budgets and companies’ margins.

The Federal Reserve has already responded to inflation pressure. On Sept. 16, it raised its target interest-rate range by a quarter percentage point to 3.75%–4%, saying inflation remained elevated. Its next policy meeting is scheduled for Oct. 27–28.

Before that meeting, officials will receive two closely watched price reports. The Bureau of Labor Statistics will release September’s Consumer Price Index on Wednesday, Oct. 14, at 8:30 a.m. Eastern. The Producer Price Index, which measures prices received by domestic producers, follows Thursday at the same time.

Those reports will help establish whether price pressure is easing or spreading. One month’s figures will not settle the question, but an unexpectedly strong reading could complicate the case for holding rates steady.

Friday also showed how quickly a company’s competitive outlook can change. Telecom shares fell after SpaceX’s agreement to acquire nationwide low-band wireless spectrum raised concerns about future competition from its mobile service.

For investors, the approaching earnings reports will turn broad expectations into company-by-company evidence. Strong results could support another attempt at a record. Weak demand, rising costs or stubborn inflation could make that advance harder to sustain.

JBizNews Desk | Wall Street

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