The futures indices are trading around breakeven levels this morning, following a day of some profit-taking after the major market indices reached all-time highs on Monday. Several earnings reports have been released this morning, including one from large financial firm Morgan Stanley (MS), which beat market estimates based on stronger investment banking revenues. On the other hand, shares of semiconductor equipment manufacturer ASML Holding (ASML) continued yesterday’s selloff after posting net bookings of orders much lower than the Street had expected. Other companies are slated to report quarterly earnings data this week, with little economic data on the docket today. Thus, earnings will likely drive changes in stock prices today.
The stock market started negatively yesterday after the major indices reached all-time highs on Monday. Lackluster earnings results at a few companies were released, and traders sold off several positions throughout the day. The major indices largely trended lower through much of the session and ended near their lows for the day. Overall, the S&P 500 fell 45 points (down 0.59%), the NASDAQ declined 189 points (down 1.01%), and the Dow Jones Industrial Average was off 325 points (down 0.75%). Despite a significantly down day for the major indices, market breadth was rather even, favoring neither advancers nor decliners by a significant amount. REITs were amongst the best performers, while energy issues were amongst the weakest, hurt by a decline in the related commodities. Dow-30 component UnitedHealth Group (UNH) was notably down on the day, hurt by reduced expectations for future earnings, driven by predictions of potential Medicare and Medicaid spending cuts.
In commodity news, oil prices fell considerably yesterday after a slight easing of geopolitical tensions. A report stated that the Prime Minister of Israel, Benjamin Netanyahu, told the Biden Administration that Israel is focused on hitting military facilities in Iran as opposed to oil- or nuclear-related locations. Elsewhere, U.S. Treasury bond yields fell as traders bought the safe haven asset as stocks declined. The Chicago Board Options Exchange Volatility Index, or VIX, commonly known as the fear index, rose throughout the day yesterday as traders demanded more options protection.
Several economic reports will be released in the days ahead. These include initial jobless claims, U.S. retail sales for September, the Philadelphia Fed Manufacturing Survey, and a report on Homebuilder confidence, all scheduled for Thursday. On Friday, housing starts and building permits will be released. Elsewhere, earnings season is in full swing, with several hundred companies slated to report quarterly results in the days ahead. This will include several larger financial institutions. Overall, we expect that this slew of data will drive changes in sentiment and trading across the market in the days ahead. - John E. Seibert III
At the time of this article’s writing, the author held positions in none of the companies mentioned.
CLICK HERE for more information on our services or call 1-800-VALUELINE (1-800-825-8354). Our account managers are available Monday through Friday, 8:00 AM to 6:00 PM Eastern Time.
