After The Close
The stock market managed to advance this morning, slipped into negative territory in the mid-afternoon, but rebounded later in the day. Of note, initially investors did not seem overly pleased with the latest batch of corporate reports that were released. However, the tone gradually improved, and by the end of the session, the major averages managed to make some progress. The Dow Jones Industrial Average was ahead 46 points; the broader S&P 500 Index was up nine points; and the NASDAQ was higher by 16 points.
Market breadth was slightly favorable, with advancers just ahead of decliners on the NYSE. From a sector perspective, the healthcare and basic materials issues made some progress, while the industrial stocks and services names took a step back.
Meanwhile, it was a light day for economic reports, and the lack of information may have contributed to the muted tone today. Tomorrow, the pace will pick up considerably. Specifically, the latest weekly initial jobless claims are due out. The September durable goods orders will be released. Also, we will get a look at the latest the monthly new home sales figures.
In the corporate arena, we recently received reports from some widely-held names. Of note, shares of Texas Instruments (TXN) headed sharply lower, after the semiconductor company’s outlook fell short of analyst expectations. Shares of Boeing (BA – Free Boeing Stock Report) gained some ground. The aerospace giant put out weak quarterly results, but seemed to be on the road to solving the problems surrounding the 737 Max plane. Finally, Caterpillar (CAT – Free Caterpillar Stock Report) stock finished higher, even though the equipment maker delivered a soft report and provided a muted outlook.
Technically, traders seem to be in need of some guidance. It is likely too early to tell how the third-quarter earnings season will play out. However, a wave of strong reports may be needed to lift equities meaningfully higher from here.
– 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 stock market opened on a cautiously optimistic note yesterday, with generally strong earnings from a succession of blue chip companies that are domiciled in the 30-stock Dow Jones Industrial Average, helping to lead equities modestly higher during the morning. In fact, by the 11:00 AM (EDT) hour, the Dow was ahead by 30 points after spending the prior 90 minutes edging in and out of the plus column. The S&P 500 Index was ahead by six points and the NASDAQ was up by a handful of points. Another solid gain in household products maker and Dow component Procter & Gamble (PG – Free Procter and Gamble Stock Report) led the charge for the bulls.
Also gaining on a solid quarterly release were the shares of aerospace conglomerate United Technologies (UTX – Free United Technologies Stock Report). That Dow component was ahead more modestly than PG, but was firmly in the plus column as well. But the big story on the day was being made by Biotech firm Biogen Inc. (BIIB). That issue, benefiting from plans to revive an Alzheimer's drug, was up more than 25% in late morning after having soared by better than 40% earlier in the session. The good Biogen news coupled with the stellar earnings numbers from the large-cap group would then propel the market still higher in the next hour.
Overall, it was continued healthy earnings that drove stocks higher to that point. Meanwhile, in other news, the National Association of Realtors reported that sales of existing homes had receded in September, following back-to-back months of increases. The drop in activity, though, was contained, with sales falling just 2.2%. The annual rate of 5.38 million homes sold, meantime, was still fairly and should not give investors undue concern about a housing market that now is being helped by lower mortgage rates. Tomorrow, we are due to get data on new home sales and orders for durable goods.
As to the stock market, the modest strength in the Dow persisted, but there was some emerging weakness in the NASDAQ, which had turned negative as we passed the two-hour mark of the trading day. The Dow then would strengthen as the morning ended and the afternoon began, with the blue chip composite advancing to a gain of almost 120 points as we moved inside of the final 90 minutes of trading. However, prices would pull back abruptly in the following minutes, with the aforementioned increase halved in minutes. The NASDAQ, already lower on a drop in Facebook (FB) shares fell further.
Meanwhile, in addition to earnings, economic reports, and trade issues with China, the investor community also was starting to focus on the next Federal Reserve meeting, which is to take place in two weeks. The consensus remains that the Fed will lower interest rates at that time. But many now sense that the lead bank could pause thereafter to see what the economy does. That possible approach might not sit well with the bulls. In any event, the market continued to give ground as the final hour began, with the Dow's gain almost completely given back. In fact, by just after 3:00 PM (EDT), all of the averages were lower.
The move into the red by the Dow would be brief, however, and within minutes the blue chips again would be modestly higher. But that late comeback would not last, and as we hit the finishing bell, the Dow was back in the red, falling to a closing loss of 40 points. The S&P 500 and the NASDAQ dropped 11 points and 59 points, respectively, with the latter dragged down by weakness in tech. Looking out to a new day now, and casting our eyes overseas, we see that stocks were mostly lower in Asia overnight and are mixed in Europe so far this morning. Finally, Treasury yields are easing and the U.S. equity futures are little changed to this point.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
