The futures markets are trading in the red this morning, and Treasury yields have moved higher. The markets suffered a second day of losses yesterday, following what had been a notable streak of gains over the past few weeks, as a couple of news developments from large companies hurt the major indices. These included a decline in shares of Dow-30 component and fast-food giant McDonald’s (MCD) following a U.S. Centers for Disease Control and Prevention report that tied an E. coli outbreak to the company’s food. Additionally, shares of coffee merchant Starbucks (SBUX) fell after it released preliminary results that showed declining sales and suspended its existing earnings guidance. Overall, these factors suggest a weak start to the trading day. Later today, a few economic reports, including existing home sales and the Federal Reserve’s Beige Book (or Summary of Commentary on Current Economic Conditions report), will likely impact trading.
stock market started quite negatively yesterday following a few disappointing earnings reports, on the heels of several weeks of gains. However, sentiment turned more positive later in the trading session, and the major market indices moved higher throughout the afternoon, with the major indices ending not too far from their daily highs. Overall, the S&P 500 declined just three points (down 0.05%), and the Dow Jones Industrial Average fell seven points (down 0.02%), as both nearly broke even on the day. Meanwhile, the NASDAQ managed to finish in the green, up 33 points (up 0.18%). The Dow Jones Industrial Average was notably dragged down by a decline in the shares of constituent Verizon (VZ), which reported lower-than-expected revenues due to a slower phone upgrade cycle. Overall, market breadth was somewhat negative, with decliners outpacing advancers by a 1.3-to-1.0 ratio. Consumer staples stocks were amongst the best performers on the day, while industrials were amongst the weakest.
In commodity news, oil prices bounced back in the initial portion of trading as investors priced in better sentiment for demand from China. However, this turned around quickly, and the price of the commodity fell into the red. Elsewhere, U.S. Treasury security yields initially fell as traders moved into the safe haven asset, but yields returned to near prior levels throughout the day. The Chicago Board Options Exchange Volatility Index, or VIX, also known as the fear index, spiked higher in the first portion of the day before trending lower through the rest of the day.
A few economic reports will be released in the days ahead. These include initial jobless claims, new home sales for September, and the S&P flash U.S. services and manufacturing Purchasing Managers’ Indices. On Friday, durable goods orders and the final University of Michigan’s consumer sentiment index for October are on the docket. Elsewhere, earnings season will continue in earnest as several hundred larger companies are slated to report quarterly results in the days ahead. - John E. Seibert III
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
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