After The Close
The stock market started choppily today, as a slew of earnings reports hit the newswire. Specifically, the Dow Jones Industrial Average began the day lower, as lackluster quarterly results from 3M (MMM – Free 3M Stock Report) hurt the index. Meanwhile, this negative influence was partially offset by a solid report out of Microsoft (MSFT – Free Microsoft Stock Report), which was released after Thursday’s closing bell. The S&P 500 was higher, however, as a few smaller companies reported decent results. Too, the NASDAQ moved upward, aided by excellent performances at key constituencies. Each composite moved up and down in tandem, but the Dow spent the whole day in the red; the S&P 500 spent most of the day wavering between green and red; the NASDAQ was in the green the entire day. All told, the Dow closed lower by 28 points, the S&P 500 was up by six points, and the NASDAQ finished up 66 points.
Additionally, market breadth was directionless today, favoring neither advancers nor decliners by a significant amount. Technology stocks were among the best performers, aided by solid Microsoft performance. On the other hand, communications equities were lower, hurt by poor performance in AT&T (T).
In commodity news, oil prices were higher, as a rally continued due to the less-than-expected crude oil inventories reported yesterday. Meantime, U.S. Treasury bond yields were higher, though only by a modest amount. The VIX Volatility Index was lower as demand for options protection fell a bit.
Looking ahead, some economic data will be released tomorrow, including the University of Michigan Consumer Sentiment Index for October. Additionally, the earnings season will continue, with several large companies slated to report quarterly results. These include Dow-component Verizon (VZ – Free Verizon Stock Report) before the bell. Too, we think the market will be affected by several companies that will report after the closing bell today, such as Dow-components Visa (V – Free Visa Stock Report) and Intel (INTC – Free Intel Stock Report).
All told, we think that trading tomorrow will primarily be affected by these earnings reports and any developments in the U.S. trade situation with China.
– John E. Seibert III
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
Before The Bell
After seeing the equity futures stumble in the pre-market on some concerns about corporate earnings season, which generally has been decent, but also has contained pockets of notable weakness, the market stiffened its resolve and headed irregularly higher at the open. In fact, within minutes, the 30-stock Dow Jones Industrial Average, a late casualty on Tuesday, had rebounded to post a gain of 76 points. However, the other indexes, most notably the NASDAQ, which had sold off sharply the day before, continued on an irregularly downward path as the first hour came and went.
Regarding the equity market, stocks initially saw some selling on another downbeat report from industrial giant and Dow component Caterpillar (CAT – Free Caterpillar Stock Report). However, when that issue did not sell off sharply, the Street got a second wind, with each of the indexes heading higher as we hit the second hour of trading. The flattish performance by Caterpillar, meanwhile, was encouraging as that company posted shortfalls in both revenues and earnings. Also helping sentiment was a jump in the price of Boeing (BA – Free Boeing Stock Report) stock, which climbed over 2% after the airplane maker said that it will stock to its schedule for the return of the beleaguered 737 Max craft.
Meantime, profit weakness at Texas Instruments (TXN) weighed on the chip sector somewhat. Still, most companies are beating their reduced profit estimates for the third quarter. And that showing, albeit not compelling, has been firm enough to keep the market on fairly secure footing as October rolls along. In all, as we reached the noon hour in New York, the Dow, once up by just over 100 points, was still up by half that amount. The other indexes also were still higher, if grudgingly, led by technology icon Apple (AAPL – Free Apple Stock Report) shares, which again had set an all-time high in late-morning trading.
The market would stay higher through the first part of the afternoon, but the strength was muted and selective. The stock market, for all of its resilience and general satisfaction with earnings season to date, is still bothered by global political and military concerns and festering trade issues with China. Whatever the causes, the morning rally had given way fully as we moved into the final ninety minutes, as red arrows appeared in all three major large-cap indexes. But that late falloff would give way as we entered the final half hour, and within minutes, the Dow was back up into the plus column.
That comeback would continue into the close, with the market adding some points across the board. As the final bell sounded, the Dow, boosted by some strength in selective blue chips, including Apple, and a late buying burst, in general, rose 46 points; the S&P 500 Index ended matters above 3,000, gaining nine points; and the NASDAQ, rose 16 points. Treasury yields dipped slightly, ending the session at 1.76% on the 10-year instrument. All in all, it was another trading day of marking time, as investors await further earnings release and key economic reports (such as sales of new homes) due out later today.
Looking at a new day, we see that stocks were generally higher in Asia in the overnight hours, while they are rising in Europe to this point in the morning. Also, Treasury note yields are up slightly and oil quotations are easing. Finally, our equity futures are pointing to a higher start when trading resumes.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
