After The Close
The major U.S. stock indexes started the day with a solid advance and, for the most part, built on that steady uptrend throughout the trading session.
Economic news was largely upbeat today. Topping the list was the Labor Department’s report showing that job openings increased to a record 7.14 million in August, marking the highest point in decades. Elsewhere, the National Association of Home Builders said that its monthly confidence index was up a point in October, as housing demand remains solid. Meanwhile, the Federal Reserve announced that industrial production was up 0.3% last month, in line with expectations. More important for investors, Corporate America continued to deliver on the earnings front, with companies posting mostly favorable reports for the September quarter.
When all was said and done, the Dow Jones Industrial Average closed the session with a gain of 547 points, or 2.2%, the broader S&P 500 was ahead by 59 points (2.2%), and the tech-heavy NASDAQ led the pack percentage-wise with a 214-point advance (2.9%).
All 10 of the major market sectors were firmly in the plus column for the day, with the biggest gains coming from technology (+3.2%), healthcare (+3.0%), and consumer cyclicals (+2.3%). The time-worn Wall Street adage that a rising tide lifts all boats was very much in evidence today, as even the laggards (in this case telecommunications, basic materials, and energy shares) were up more than a full percentage point each. Altogether, advancing issues led decliners by more than five-to-one on the New York Stock Exchange.
Lastly, investor sentiment was also positive on the key European bourses. Gains ranged from just under half a percent for the U.K.’s FTSE 100, to about 1.5% for Germany’s DAX and France’s CAC 40.
– Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell
What's more, there are the unknowns presented by the fast-approaching mid-term elections, by questions about the vigor of the economic expansion (after a second-quarter surge in GDP growth), and by the usual earnings worries, as third-quarter reporting season gets under way. Finally, there is the recent selloff in the tech stocks that has the Street on edge. Although the market has been weaker, in general, the selling in that volatile group has been particularly fierce.
Looking at these issues, it seems likely that the economy had a decent third quarter, with growth reaching or even slightly topping 3%, even though data out yesterday showed that retail sales were up by just 0.1% in September. A gain of 0.6% had been the consensus forecast. In all, a rebound in car sales was offset by weakness elsewhere. That was the second consecutive month showing a meager 0.1% increase in such spending. In other news on the first trading day of a new week, oil was fairly flat and interest rates were nudging higher.
As to the market, stocks were tracing an irregular path, with the Dow Jones Industrial Average going in and out of the red during the morning, while the NASDAQ was pushing downward on weakness in shares of Apple (AAPL – Free Apple Stock Report) and Netflix (NFLX). The latter issue was under pressure following some negative comments by a brokerage house. Also, the small-cap Russell 2000 again was under pressure. Meantime, sentiment remains shaky, with the new worries surrounding Saudi Arabia adding to the global tensions with China.
Meanwhile, as the morning wound down, the Dow was heading a bit more definitively into the black, but the tech-driven NASDAQ was still floundering. There then would be one more selling squall, which would bring the Dow back down to session lows and the NASDAQ still lower, before another round of buying would commence, as the ups and downs of market psychology would roll on. It would be that sort of a day as we moved along into the early afternoon, with bargain hunting interspersed with additional profit taking setting the tone.
Things would not change much as the afternoon progressed, as the market's ups and downs would continue as we reached the final hour of trading. At 3:00 PM (EDT), the Dow had jumped ahead to a gain just north of 100 points, while the NASDAQ, under pressure for most of the session, still was under water, but by just about 10 points. It then looked as though the ebb and flow would continue into the close. And for much of the final hour the averages did meander back and forth, but with one final push lower at the close.
As the final bell sounded, the Dow was off 89 points, the NASDAQ was lower by 66 points, and the S&P 500 was off 16 points. Looking out now to a new day, we see that stocks in Asia traded generally higher in the overnight hours; while in Europe, the bourses are trending positively, as well. Also of note, oil prices are ticking lower and Treasury note yields are rising a bit. Finally, ahead of more earnings news, we see that the U.S. equity futures are showing early gains.
