U.S. equities closed higher on Friday, with the S&P 500 advancing 0.59% to 7,811.54, finishing just 7.39 points below Tuesday's record close. The gain was notable for its breadth: about 64.8% of S&P 500 components were trading higher by mid-afternoon, and the equal-weight S&P 500 ETF closed up 0.55%, nearly matching the benchmark's performance. This marked a shift from the narrow opening rebound, indicating a more widespread advance.
The rally came despite headwinds from rising Treasury yields and a significant selloff in telecom stocks. The 10-year Treasury yield rose two basis points to 5.24%, while the 2-year yield climbed five basis points to 4.80%. Investors rotated into healthcare and real estate sectors, while reducing exposure to wireless operators. The S&P 500 gained 1.15% for the week, while the Dow Jones Industrial Average rose 0.83% to 51,654.95 and the Nasdaq Composite added 0.64% to 27,366.17.
Telecom Rout and Spectrum Deal
T-Mobile US (NASDAQ:TMUS) plunged 13.3%, leading a telecom selloff that also hit AT&T (NYSE:T) down 9.8% and Verizon Communications (NYSE:VZ) down 8.7%. The declines followed SpaceX's (NASDAQ:SPCX) agreement to acquire nationwide 800 MHz spectrum, including up to 14 megahertz of paired low-band spectrum, which could support indoor Starlink Mobile coverage. The transaction is pending FCC approval. In contrast, Crown Castle (NYSE:CCI) jumped 15.6% and American Tower (NYSE:AMT) gained 9.3%.
Healthcare and Real Estate Lead
Real estate and healthcare sectors led the ETF board, with the Real Estate Select Sector SPDR Fund (XLRE) up 1.86% and the Health Care Select Sector SPDR Fund (XLV) up 1.58%. The Technology Select Sector SPDR Fund (XLK) rose 0.51%, while the Communication Services Select Sector SPDR Fund (XLC) fell 1.51%. The 3.37-point spread between leading and lagging sectors reflected company-specific news rather than a uniform macro trade.
Humana Inc. (NYSE:HUM) surged 11.6% after reporting stronger Medicare Advantage quality scores. The company's October 9 filing showed a 4.17 member-weighted rating, with 95% of members in contracts rated at least four stars. CEO Jim Rechtin said the results “approach the highest Star Ratings Humana has ever achieved.” Baird upgraded Humana to Outperform and raised its price target to $596 from $390.
Analyst Actions
Scotiabank maintained its Sector Outperform rating on T-Mobile but cut its price target to $212 from $217. Barclays raised its Crown Castle price target to $86 from $84, keeping an Overweight rating.
Cross-Asset and Economic Data
Commodities and rates did not offer a single risk-on signal. Brent crude rose 0.4% to $104.72 a barrel, while gold futures advanced 1.5% to $4,219.70 an ounce. The dollar index firmed 0.08% to 102.223. The preliminary University of Michigan consumer sentiment survey fell to 46.3 from September's 48.1, with year-ahead inflation expectations rising to 4.7% from 4.6%.
Market Breadth and Outlook
Near the close, 326 S&P 500 stocks advanced, 175 declined, and 2 were flat. The Russell 2000, however, slipped 0.91% for the week, highlighting a gap between large caps and small caps, which remain more sensitive to elevated financing costs.
Investors now look ahead to next week's earnings and inflation data. JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), and Wells Fargo (NYSE:WFC) are scheduled to report on Tuesday, October 13, followed by the September CPI on Wednesday.
