After The Close
The major U.S. stock indexes came out of the gate with a positive opening today and, for the most part, added to those gains as the session wore on.
With no noteworthy developments on the U.S./China trade front, investors’ attention was redirected to the start of third-quarter earnings season, where the early news was largely upbeat. Leading the charge were major U.S. banks, with shares of JPMorgan Chase & Co. (JPM - Free JPMorgan Chase Stock Report), Citigroup (C), and Wells Fargo & Co. (WFC) all rising on better than expected top-line growth. Elsewhere, Dow component UnitedHealth Group’s (UNH - Free UnitedHealth Stock Report) robust earnings release gave investors much to cheer about.
When all was said and done, the Dow Jones Industrial Average closed the session with a gain of 237 points, or 0.9%, the broader S&P 500 was ahead by 30 points (1.0%), and the tech-heavy NASDAQ led the pack percentage-wise with a 100-point advance (1.2%).
Most of the major market sectors were firmly in the green for the day, with the biggest gains coming from healthcare (+1.6%), technology (+1.3%), and consumer cyclicals (+1.1%). At the other end of the spectrum, utilities and consumer noncyclicals ended with modest losses. Altogether, advancing issues led decliners by more than two-to-one on the New York Stock Exchange.
Elsewhere, oil prices stepped back, with light sweet crude down 1.3%, to around $52.90 a barrel. This marked a back-to-back loss for the commodity, as concerns over a global economic slowdown lingered.
Notably, the latest outlook issued by the International Monetary Fund (IMF) called for global economic growth to slow to 3% this year, which would be the smallest advance since 2008. Moreover, the IMF suggested that proposed U.S. and China tariffs could reduce global growth to 2.6% in 2020. Additionally, the Energy Information Administration announced today that it looks for U.S. shale oil output to increase by 58,000 in November.
Lastly, investor sentiment was largely positive on the key European bourses, boosted by optimism for a Brexit deal and the positive earnings news emanating from the U.S. Germany’s DAX and France’s CAC-40 both finished with gains of a little over 1%. However the U.K.’s FTSE 100 ended the session just below breakeven, as a stronger pound weighed on corporate profits.
– 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
Wall Street returned from the weekend yesterday and, after a big win on Friday, traders began the Columbus Day session briefly to the downside. However, stocks turned mixed after the first half hour of trading, even as the bond market was closed for this semi-holiday. The early selling, which would see the Dow Jones Industrial Average lose close to 70 points, was the result of the emergence of some doubts about the finalization of a trade deal between the United States and China.
Specifically, officials from China said that they were not yet ready to sign off on a trade deal. Expectations that such an accord would be struck had sent stocks soaring on Friday. Declining energy shares also hampered the bulls at first. This mixed tone, meanwhile, would continue through the first hour of trading. Volume was muted as well by the Columbus Day holiday, which kept the bond market closed. Breaking the market down, the major large-cap indexes were little changed at that time, but the small-cap groups were decidedly lower.
This mixed tone then would continue over the balance of the morning and into the first part of the afternoon. The range-bound activity would in part reflect the holiday-like atmosphere surrounding Columbus Day. Stocks then would pull back slightly after 1:30 PM (EDT), but there was no rush to the exits. The lack of enthusiasm continued to reflect China's apparent desire for more talks before signing onto any trade deal, even the limited one that the two nations have been edging toward.
As for the trade talks, China said that the two sides were making progress, but that there was no deal in hand as of yet. In other matters, investors may have been somewhat on edge as earnings season fast approached. A number of larger companies will start the profit ball rolling this week, including some high-profile banking institutions, such as JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report) and Goldman Sachs (GS - Free Goldman Sachs Stock Report). Both banking behemoths are components of the Dow Jones Industrial Average. Large tech firms also will be on the earnings docket over the next week, or so.
The stock market would go back and forth for the balance of the session, with the averages edging higher from 1:30 to 2:30, but easing modestly thereafter, to finally close the session slightly lower. In sum, the Dow would finish off by 29 points, while the S&P 500 closed off four points and the NASDAQ ended matters in the red by a mere eight points. Most groups were softer, with bond yields edging lower. Also down somewhat was the small-cap Russell 2000, which gave back six points.
Looking out to a new day now, and with the bond market open again and other institutions back on schedule, the markets in Asia were mixed in the overnight hours, while in Europe, the principal bourses are in the plus column. In other markets, oil prices are down so far this morning; gold prices are steady; and Treasury note yields are off in early dealings. Taking all of this in and looking ahead to our session, the early read on the U.S. stock market is higher.
– Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
