After The Close
The stock market moved nicely higher today, as traders reacted favorably to the latest batch of corporate profit reports. At the close of trading, the Dow Jones Industrial Average was up roughly 29 points; the broader S&P 500 Index was ahead two points; and the NASDAQ was higher by 29 points. Market breadth was supportive, with winners ahead of losers on the NYSE. Further, most of the major equity groups showed gains, as the consumer, energy, and technology stocks showed leadership. However, the financials and healthcare issues delivered a somewhat sluggish.
Traders received a couple of economic news items this morning. Specifically, the Chicago PMI rose to a reading of 66.2 during the month of October, which was well ahead of expectations. In addition, the Consumer Confidence Index reached 125.9 in October, an almost 17-year high. Tomorrow, we will get a look at Automatic Data Processing’s (ADP) private sector jobs report for the month of October. The latest monthly ISM Index, as well as the construction spending figures, will also be released. Meanwhile, in the afternoon, the FOMC will wrap up its two-day meeting with an interest-rate decision, accompanied by some prepared comments. Traders will be watching for developments in this area.
Meanwhile, the third-quarter earnings season continues. Over the past 24 hours, we heard from a few names in the packaged food space. Specifically, shares of Mondelez (MDLZ) and Kellogg Corp. (K) moved up sharply, after these companies delivered encouraging reports. In the healthcare sector, shares of Pfizer (PFE – Free Pfizer Stock Report) eased slightly, even though the pharmaceutical giant put out a respectable report.
Technically, the stock market continues to show some strength, thanks in part to a solid corporate reporting season. However, traders will also likely be keeping an eye on the recent developments in Washington.
— Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Mid-Day Update - 12:20 PM EDT
The U.S. equity markets started the day in mixed fashion, but the major indexes advanced into a positive formation as the morning session wore on.
The day has been light in terms of economic news. The Conference Board reported that U.S. consumer confidence for October clocked in well above expectations, chalking up its highest reading in nearly 17 years. Elsewhere, the Federal Reserve started its two-day FOMC meeting this morning. Our take is that no rate increase announcements will be forthcoming when it wraps up the session tomorrow.
Instead, it appears that that earnings season will continue to hold sway among traders, and the majority of announcements have made for good reading. Among some of the more notable names reporting recently, Aetna (AET), Pfizer (PFE – Free Pfizer Stock Report), and Mondelez International (MDLZ) all reported earnings that topped consensus estimates.
As we crossed the noon hour in New York, the key U.S. indexes had eased off from their highs for the morning, but were still on the plus side. The tech-heavy NASDAQ was ahead of the pack with a gain of 0.40%, after touching upon an intraday record. Meanwhile, the Dow Jones Industrial Average (up 28 points) and S&P 500 (ahead by four) were not too far behind.
The major market sectors were predominantly in positive territory, led by consumer noncyclicals (up nearly three-quarters of a percent) and technology shares (up about .5%) The only group in the red were healthcare stocks, and even then, they were just shy of the unchanged mark.
Taking a quick look at the European markets, traders across the Atlantic appeared to have reasons to be upbeat after euro zone GDP growth for the third quarter came in higher than expected. Also, the September unemployment rate fell to the lowest reading since 2009. The CAC-40 spent most of the day in the green and was holding onto a modest gain as the closing bell approached. Meanwhile, the U.K.’s FTSE 100 started out strong, but a late afternoon swoon sent it briefly into the loss column before recovering to just above breakeven. Germany’s market was closed.
– Mario Ferro
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 roared into the final two days of October following a stellar week over the last five-day span and with the strongest showing since February comfortably in hand. With all that, however, equities still headed lower to start things off, with the Dow Jones Industrial Average quickly falling to a loss of nearly 100 points. The main culprit seemed to be suggestions that the expected drop in the corporate tax rate to 20% would be only gradually effected, rather than all at once, with the presumed target date likely 2022.
However, after that brief selloff, the market's resolve stiffened, and as we moved further into the morning, the Dow's loss was nearly erased, while the tech-laden NASDAQ turned nicely higher. However, that was merely a tease for the bulls, and as the morning concluded, the market's losses deepened again, with the Dow's deficit climbing a bit past 100 points. Still, there were some tech stalwarts that were able to withstand the selling, with Apple (AAPL - Free Apple Stock Report) stock, for example, climbing by some five points early in the session.
In addition to taxes, the market also is consumed by third-quarter earnings, which have been decent for the most part, and stocks have responded well in those cases. On point, Apple will report its results on Thursday, with the issue rallying strongly ahead of that release. Meantime, there also is the economy to consider and the Federal Reserve. With regard to the latter, the bank is beginning its two-day FOMC confab this morning. It likely will finish up that meeting tomorrow afternoon with no interest rate adjustment.
As to the economy, this will be a very busy week, with a whole host of data issuances upcoming, headlined by this Friday's report on non-farm payrolls. Expectations are that the government will report that some 300,000 were added in October. That would be a welcome reversal from September's payroll drop of 33,000 positions. Before that, however, we will get a reading on consumer confidence later this morning, and surveys on manufacturing, auto sales for October, and the trade gap. Overall the reports should show continued business resilience.
Meantime, the stock market continued to falter as the afternoon began, with the Dow continuing to trend 70-80 points lower in the early afternoon, while nearly all the 10 leading equity groups were lower, as were three stocks for every two that gained on the Big Board. Especially hard hit yesterday was the small-cap Russell 2000, which was off by more than a percentage points at mid-session. In short, this was a broad-based selloff, but was by no means a very deep one to that point.
Stocks then stayed securely in the minus column as the afternoon moved along, with all of the major averages holding at lower points, most notably the Dow and the small-cap Russell 2000. At the conclusion of trading, there was a notable bias to the downside, with eight of the 10 leading equity groups in retreat, while losing stocks held a firm 18-to-11 lead on gaining issues. As to individual names, drug making behemoth Merck & Co. (MRK - Free Merck Stock Report) shares tumbled some 6% on a succession of downgrades.
Looking out at a new day, and as the Federal Reserve prepares for its FOMC meeting, we see that stocks were lower in trading across Asia overnight. In Europe, meantime, the early read on the markets this morning shows a mildly positive tally. As to our markets, the futures are suggesting a higher opening when trading resumes, and ahead of a wealth of economic and corporate news. As noted, the big stories this week figure to be the Fed, the employment report, and corporate news, with a little politics thrown in. Stay tuned.
— Harvey S. Katz, CFA
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
