S&P 500 notches new all-time high   

Wall Street hit new highs, powered by strong earnings and improving labor market. Dozens of companies had to report this week and the least we can say is that a vast majority of them beat consensus (especially EPS expectations). Thus, the S&P 500 jumped 1.64% (highest closing price of 4,549.78 on October 21), the Dow Jones Industrial Average rose 1.08%, or 282 points. The Nasdaq Composite added 1.29%, shrugging off rising treasury yields. The VIX volatility index dropped to a ten-week low, below 15.5.

Market sentiment was less favorable around the globe. The MSCI EMU was up 0.33%. The Shanghai Composite edged up 0.29% despite Evergrande’s troubles. The Chinese group eventually averted its first bond default after remitting $83mio at the last minute. This settles a coupon payment it missed a month ago. Japan's Nikkei fell 0.91% as yen pairs were losing momentum (USD-JPY: -0.63%, EUR-JPY: -0.26%). South Korea’s Kospi was down 0.3%. By contrast, the Taiwan TSEC weighted index was up 0.64% in spite of heightened tensions between Taipei and Beijing. China keeps on claiming sovereignty over the island.

Green everywhere except for communication services

Once again, only one S&P sector finished in negative territory (communication services: -0.62%) as was already the case last week. Among the sub-index components, Facebook recorded a sixth week in the red (-0.05% week-over-week, cumulative loss of -14.28% since 10 September), Google-parent Alphabet fell 2.15% and Walt Disney Company nose dived 3.99%. On the other hand, DWAC’s stock surged 846% on news that it would be the SPAC merger partner for Donald Trump's new social media venture.

Real estate was the best performer (+3.22%). Health care stocks also led the gainers (+2.87%), with many companies showing strength across their businesses. Within cyclical sectors, financials shined (+2.79%) as yields advanced. Information technology performed in line with the broader market (+1.61%). Apple and Microsoft stocks gained 2.66% and 1.63% respectively. Energy lagged behind (up 1.18%) but it’s worth noting that the sector has notched six straight weeks of gains. Elevated energy demand amid tight supplies continues to keep oil prices trending higher. This is the ninth positive week in a row for WTI crude (up +1.80% week-over-week, +34.5% since August 20).

Bond prices fall again

Treasury yields rose across the globe. The benchmark 10-year yield closed at +1.66% in the U.S., +0.24% in France and -0.10% in Germany.

Corporate investment grade bonds plunged in the face of rising Treasury yields (-0.37% in Europe, -0.33% in the U.S.). High-yield bonds (-0.08% in Europe, -0.14% in the U.S.) slipped too. Emerging debt was the most affected asset class by the trend reversal (-1.04% in local currencies).

Elsewhere, gold regained ground (+1.42%, spot price at $1,792.65/Oz) while the dollar index receded again (-0.36% at 93.61). In the crypto space, Bitcoin hit a new record high (above $67,000) Wednesday, in the wake of the launch of the first U.S. bitcoin futures ETF. BTC then retreated from its peak, below 60,300. Some analysts at major banks expressed doubts about the impact of this fund on cryptocurrency investment flows.

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