Employment growth and profit growth was the combination that kept investors talking last week. Our Quad-City Times Key 15 was lifted by investors to a 9.57 gain, closing the week at 2,258.51 (1).

Daily releases of quarterly earnings reports pushed individual stocks to gains or losses, sometimes sizable ones. But, it was the growing economy that provided insight into the environment for those companies.

As November opened on Wednesday, Automatic Data Processing, nation’s largest payroll processor, released its estimate of 235,000 new private sector jobs created in October. The sizable gain was a welcome relief for investors following a downwardly revised (and hurricane impacted) September gain of just 110,000. ADP regarded the October hiring rebound as evidence of a faster recovery from the September storms.

The U.S. Labor Department survey provided a contrasting look at employment’s rebound. Out Friday morning, the department estimated a 261,000 gain in “non-farm payrolls,” a slightly different measure, but again regarded as evidence of a post-hurricane recovery movement.

Unemployment, released from a separate survey, was calculated by the department at 4.1 percent of the labor force, a contrast to the 4.2 percent in September.

Beyond employment, two other measures measured business and consumer demand. The Institute of Supply Management’s purchasing manager index, also out Wednesday, slipped minimally from 60.3 in September to 58.7 in October. This measure of purchasing activity in the manufacturing sector suggests that an impressive 58.7 percent majority of purchasing managers are increasing purchases of parts and supplies to be used in manufacturing. Increasing purchases suggest increasing manufacturing, cheering investors.

And, auto sales, which surged in September as buyers bought more to replace hurricane-flooded vehicles, stayed strong in October. Manufacturers reported U.S. sales on Wednesday, beating analysts’ consensus estimates with an annualized pace of 18.1 million vehicles according to Autodata. This is 1.7 percent over the prior October. And, the seasonally adjusted 18.1 million vehicle pace is above the final report of 17.55 million sold in all of 2016, according to Autodata, the research firm.

Investors put it together, knowing more jobs means more consumers, spending more that, in turn, drives auto sales and the manufacturing sector.

Quad-City companies were an added window on the economy, starting with Macerich Company’s Monday evening report. Macerich owns NorthPark and SouthPark Mall here, in addition to dozens of upscale malls across the country. Funds from operations retreated from $1.04 per share one year ago to $0.96 per share in the third quarter. Mall occupancy was nearly unchanged, down only from 95.3 percent one year ago to 94.3 percent. CEO Arthur Coppola noted that as some retailers left, others began. “Macerich achieved solid releasing spreads and tenant sales growth. This demonstrates the health of those retailers that are evolving along with the changing shopping habits of consumers…” Macerich shares retreated 2.16 to 54.39 (1) last week.

Tuesday morning brought the latest from Archer Daniels Midland, with grain processing in Clinton and operations around the world. ADM reported earnings per share falling from $.59 one year ago to $.45 in this year’s third quarter. The company reported lower profits in processing grains for oil, lower profits in agricultural services, and a compressed profit margin in the grain crushing work they do. Investors took ADM shares down $1.94 on Tuesday. For the week, Archer Daniels Midland shares were off 3.29 to 39.78 (1), as the company works to respond to sizable global grain supplies.

Kraft Heinz Company, with both Muscatine and Davenport food processing, reported third quarter profits of $.83 per share, unchanged from one year ago, after many quarters of growth. Sales climbed just 0.7 percent to $6.31 billion, less than analysts’ consensus estimate. In a fiercely competitive food processing business, sales growth has been difficult. Investors sent Kraft Heinz shares up last week by .70 to 78.00 (1).

Exelon, parent of Cordova nuclear power generating operations, reported on Thursday morning that third quarter profits of $.85 per share, at the midpoint of earlier guidance, were down from $.91 posted one year ago. Weather is big for utility companies. And, Exelon reported that milder weather in the latest quarter surely resulted in “lower load volumes” in their generation business, even as consumers benefitted. And, Exelon shares gained .71 last week to close at 40.95.1

With a stack of economic reports and most of the quarterly profit reports now behind, investors in Quad-City companies will search for guidance this week. Fewer inputs could mean more attention for each.

James Victor is senior vice president-wealth management and financial adviser with Morgan Stanley, Davenport.

The Key 15 reflects stocks of local interest. It is not a product and cannot be purchased as one. Information contained herein has been obtained by the writer from sources believed to be reliable, but he does not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results. (1) Source: NYSE

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