Before The Bell
The S&P 500 and Dow Jones Industrial Average set all-time intra-day highs during open market hours yesterday, helped by several companies reporting strong earnings results and outlooks before the bell. The indices trended higher in the morning, reaching new highs, before becoming overbought and returning to slightly above their previous day’s levels. The indices did not finish too far from their prior closes, but still were at record levels. The S&P 500 closed up eight points, NASDAQ was higher by nine points, and the Dow Jones Industrials finished 15 points to the upside. Despite the increase in the major averages, market breadth was negative, as decliners outpaced advancers. Energy issues were among the best performers yesterday, aided by a rise in related commodities. Meanwhile, communications stocks were among the weakest. However, this was caused by a negative price movement in one big name affecting the bunch.
The futures market, after a lower start last night, bounced around breakeven levels by midnight and remained not too far from those levels through the early morning hours. Strong earnings results from Dow components Coca-Cola (KO) and McDonald's (MCD) occurred in the morning. Additionally, Boeing (BA) reported an adjusted share loss, but had better cash flows than in the year prior. This earnings news has provided some support for equities this morning, but overall, the futures market suggests an uneven start to the trading session.
Today’s trading will be affected by several economic reports, including durable goods and factory orders for September, while several earnings results are due after the close. In commodity news, oil prices rose yesterday as traders think a further economic recovery will exacerbate the supply and demand imbalance.
Looking ahead, several economic reports will come out over the coming days. These include initial jobless claims and the first reading on third-quarter GDP on Thursday and the October Chicago PMI and the University of Michigan consumer sentiment index readings on Friday. Meantime, earnings season will continue, with several large companies slated to release quarterly results. These include Dow-30 components Merck (MRK), Apple (AAPL), and Caterpillar (CAT) on Thursday, and Chevron (CVX) on Friday. Overall, these releases should help paint a picture of how supply-chain disruptions, the coronavirus pandemic, and inflation are affecting the broader economy.
– John E. Seibert III
At the time of this article’s writing, the author held one or more positions in the companies mentioned.
