After The Close
The stock market traded notably lower late this morning, and remained in the loss column throughout the afternoon. Today, investors were busy digesting the latest batch of corporate earnings reports, while also keeping an eye on developments overseas. Of note, despite the recent announcements, some on Wall Street may be looking for further assurances that at least a limited trade deal will be signed with China in the near future. By the end of the day, the Dow Jones Industrial Average was down 255 points; while the broader S&P 500 Index was off 12 points; and the NASDAQ was lower by 67 points. Market breadth showed a divided session, as decliners were about even with advancers on the NYSE. From a sector perspective, the technology stocks and industrials took a step back, while the consumer names and utilities managed to advance.
Meanwhile, it was a light day for economic reports. However, the Conference Board’s index of leading indicators registered a decline of 0.1% for the month of September. Analysts had been looking for a slightly better showing. Of note, there were quite a few economic news items released over the past week. Some of these reports were a bit soft, and traders will likely want to see better numbers going forward.
In corporate news, the third-quarter earnings season continues to ramp up. Among the big names, shares of Coca-Cola (KO – Free Coca-Cola Stock Report) advanced today after the beverage giant delivered an encouraging report. The move to expand its product line seems to be working. In contrast, American Express (AXP – Free American Express Stock Report) stock ended lower even though the financial company put out respectable results. Elsewhere, shares of Boeing (BA – Free Boeing Stock Report) and Johnson & Johnson (JNJ – Free Johnson and Johnson Stock Report) both lost ground, as investors reacted to company-related news items.
Technically, the S&P 500 Index is sitting just under the 3,000 mark. Pushing equities past this key level will be the next big challenge for the bulls. Next week, the earnings parade continues.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell
The corporate news was not as encouraging for International Business Machines (IBM – Free IBM Stock Report), a component of the Dow Jones Industrial Average. That tech giant posted disappointing earnings for the latest quarter, and the issue slumped some six percent in the early going, pushing down to less than $133 a share. Then, there was the news on Brexit, in which a possible deal between the United Kingdom and the European Union might shortly be struck. That development, which is still not fully resolved, as opposition to it lingers in Parliament, was greeted warmly by the Street, helping the market get off to a good start.
Finally, there was the economy. There, the latest tidings were less upbeat. To wit, just a day after the government reported a disturbingly weak metric on September retail spending, the Commerce Department weighed in with a generally disquieting issuance on housing starts. Specifically, Washington noted that starts fell 9.4% on a month-to-month perspective in September, while U.S. building permits, a more forward-looking metric, eased less sharply. Importantly, both data points rose on a year-to-year basis. At the same time, industrial production, which had risen nicely in August, gaining 0.8%, fell by 0.4% last month.
These releases support the notion that the economy is slowing down, but not yet faltering. Also, the evolving softness suggests that the Federal Reserve likely will reduce interest rates when it meets at the end of this month. These myriad developments, meantime, did not dampen the market's appetite for equities, as the Dow quickly rose by more than 100 points in the early going. However, that gain started to tail off in mid-morning, with the weakness in IBM weighing on sentiment as the session moved along. In the meantime, the vexing trade situation with China lingers on and that is worrisome for U.S. investors.
The stock market's subsequent descent, meantime, would push the Dow briefly into the loss column by 11:00 AM (EDT), with the late-morning retreat led by the aforementioned IBM. The market's mixed tone then would linger into the early afternoon, with the Dow moving in an out of the plus column, while the NASDAQ held comfortably in the green, boosted by the shares of Netflix. That bifurcated pattern then would continue into the mid-afternoon, when the market formed up to a degree, with the large-cap indexes all gaining ground.
