After The Close - The U.S. stock market put in a mixed and choppy session for most of the day, but ultimately closed moderately lower. Indeed, at the end of the session, the Dow Jones Industrial Average was off 73 points; the S&P 500 Index was down seven points; and the NASDAQ had surrendered 11 points. Market breadth was mixed, as declining stocks slightly outnumbered advancers on both the NYSE and on the NASDAQ. Still, most of the market sectors lost ground today. Specifically, there was notable weakness in the healthcare group, with losses in the biotechnology stocks. Also, the financial issues were dragged down by declines in the major banks. However, the industrial names managed to advance a bit, as the aerospace issues performed well.
Technically, the S&P 500 Index has been struggling to advance over the past few sessions, suggesting that traders may be getting fatigued. This is somewhat understandable, given the large gains logged over the past several weeks. Notably, a period of consolidation would not be too unexpected, and might even be healthy for equities, at this point.
The economic news was mostly constructive today, but was largely overshadowed by the third-quarter earnings season. The employment situation appears to firming up, as initial jobless claims for the week ended October 26th declined to 340,000 from the prior week’s 350,000 reading. Elsewhere, the economy in some parts of the country has been doing surprising well. The Chicago PMI jumped dramatically, rising to 65.9 in October from 55.7 in September. However, due to the surprising jump in this reading many analysts may be reluctant to see this as a reliable economic indicator. Tomorrow, we will get a look at manufacturing activity nationwide.
Also, investors received a large batch of corporate reports today. Among the widely held large-cap names, Visa (V - Free Visa Stock Report) shares slipped after the financial leader delivered weaker-than-anticipated results. Exxon Mobil (XOM - Free Exxon Stock Report) stock rose a bit, as the energy giant posted healthy figures. Also, Time Warner Cable (TWC) saw its stock move higher on a solid report. Many stocks have been making large moves, driven by quarterly earnings releases and this highlights the volatility found in this market lately. For instance, Expedia (EXPE) shares were up about 18% on a good release, while Avon Products (AVP) sank 22% on a disappointing issuance. Clearly, with price-to-earnings multiples elevated, traders will not tolerate less-than-hoped for results and guidance. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
12:30 PM EST - So far, it has been more trick than treat for investors this Halloween, but nothing too scary. Still, stocks are broadly lower today, quite possibly partly on the line of thinking that the Federal Reserve could taper its bond-buying program sooner than expected. Some earnings misses and unfavorable development at a few high-profile companies are not helping the cause, either.
Right around noontime on the East Coast, the Dow Jones Industrial Average is off 29 points, but the NASDAQ is up two points. The broader market is more indicative of the weakness, with four stocks down for every three higher on the New York Stock Exchange.
Notably, too, the Dow Transports and Dow Utilities Averages are off considerably more than the Dow Industrials on a percentage basis. The interest-rate sensitive nature of utilities stocks appears to be the main reason for their lagging performance. Wall Street had concluded that the central bank’s super-aggressive monetary policy was a lock to continue apace into 2014 after the recent government shutdown hurt the economy. But second thoughts are now creeping in. That seems to be hurting shares of utilities, such as Southern Co. (SO), given the prospect of more competitive bond yields without the Fed’s buying support.
As for the relative weakness in transportation stocks, such as FedEx (FDX), it may be a case of some profit taking after a nice run. And the same could be said for the broader market. All ten stock market sectors are in the red thus far today.
As for individual stocks, there is selective strength among energy names that have reported quarterly earnings, including Dow-30 component Exxon Mobil (XOM - Free XOM Stock Report) and ConocoPhillips (COP), and shares of CARBO Ceramics (CRR) are a big winner.
Some large-cap financial issues are lagging, though, with newly minted Dow member Visa (V) the most prominent. The credit card giant reported a strong profit gain, but investors seemed to be looking for even bigger things.
Also trading to the down side are shares of Avon Products (AVP), largely reflecting poor revenue trends and Weight Watchers (WTW), which disclosed material earnings weakness and suspended its dividend.
Heading into afternoon trading, the stock market appears to be pausing following its recent advance. - Robert Mitkowski
At the time this article was written, the author did not have a position in any of the companies mentioned.
Stocks to Watch from The Survey – The drumbeat of earnings news continues today. Third-quarter results from social network operator Facebook (FB), which were released yesterday afternoon, thrilled investors initially, and the stock surged in after-market trading on the news. However, enthusiasm faded quickly after details about the placement of advertisements and usage among teenagers emerged on the conference call. The stock, in fact, is now indicating a lower opening this morning. Meanwhile, stocks moving higher ahead of the bell on earnings news include energy giants Exxon Mobil (XOM – Free Exxon Mobil Stock Report) and ConocoPhillips (COP), online travel agency Expedia (EXPE), health insurer Cigna (CI), and brewer Anheuser-Busch InBev (BUD), with EXPE showing the most strength.
Conversely, one of today’s biggest losers is dietary services provider Weight Watchers (WTW), which announced better-than-expected September-period results, but indicated that the year ahead will likely be challenging and suspended its quarterly cash dividend. WTW stock is plunging in pre-market trading as a result. Investors also took issue with quarterly reports and/or outlooks from credit card processor Visa (V – Free Visa Stock Report), cable company Time Warner (TWC), coffee shop operator Starbucks (SBUX), shoe company Crocs (CROX), cosmetics manufacturer and seller Avon Products (AVP), telecommunications services provider NII Holdings (NIHD), and electronics heavyweight Sony (SNE). – Matthew E. Spencer
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell - Today is Halloween, but it was yesterday that the stock market had both tricks and treats for investors. To wit, stocks started out the day slightly to the upside, with both the Dow Jones Industrial Average and the Standard and Poor's 500 Index pushing to all-time highs. Then, the market began to backtrack, as restless traders sought to hedge their bets before the Federal Reserve concluded its two-day FOMC meeting at 2PM (EDT). Of course, few surprises were expected and few were given.
The market, meantime, sought to regain its footing by early afternoon before easing again just before the meeting's conclusion. The abnormally narrow range of this up-and-down pattern undoubtedly reflected the fact that few had serious doubts about just where the Fed would come down on the monetary side.
Then, the news of the meeting's end arrived, and initially when the Committee announced that it was staying the course with respect to both interest rates and bond purchases, stocks pared their small losses and again inched back into the black. It seemed that the treats had arrived on schedule. However, on further reading of the Fed statement, and with no hint that this historic accommodation would go indefinitely, as some bulls apparently were hoping for, the market sold off once more. There was never a panic unloading of stocks, to be sure, but the Dow did fall back to a low triple-digit point loss. Meantime, the Standard and Poor's Mid-Cap 400 and the small-cap Russell 2000 did proportionately worse, with the latter composite falling back to a closing loss of 1.4%--a sizable setback. This dichotomy follows a recent pattern in which some investors are turning to the more liquid large-cap names as a hedge, as valuations reach levels that may not be sustainable over the long term. So, the Fed, it would seem, had some tricks up its sleeve, after all. Indeed, some now contend that a tapering of its bond-buying program may come sooner rather than later.
Be that as it may, at the close the Dow shed 62 points; the Standard and Poor's 500 Index lost nine points; and the NASDAQ, rattled by a few losses in the tech sector, notably Cirrus Logic (CRUS), which did not blow away traders with its guidance and saw its shares fall nearly 14% on the day, dropped 22 points.
As to the Fed, there is, as noted, some worry about just when the bank will start its long-awaited tapering. For now, it seems that any move this year is likely to be out of the question. In fact, the acknowledged slowdown in housing, the sharp drop in consumer confidence and sentiment readings, and the less-than-compelling private-sector employment outlook issued yesterday by ADP (ADP) likely will keep the Fed at bay until the late winter or early spring. But some pundits, noting the absence in the statement of any reference from the last meeting that fiscal tightening could slow growth in jobs and the economy, see a tacit admission that we may be getting close to such a tapering. Of course, all of this could just be semantics. But for now, one thing is certain, namely that the Fed is not yet ready to apply the brakes on monetary accommodation.
Meanwhile, for one afternoon, at least, the focus moved away from earnings and back to Washington, although the concentration this time was on the central bank and not the Congress. Still, there was selling, but it was largely confined to the riskier sectors of the market. The VIX volatility index, meantime, edged higher, suggesting slightly less tolerance for risk, which would explain the underperformance of the small-cap Russell 2000.
Now, a new day dawns, and stocks are pulling back just a bit, in anticipation of perhaps a modest extension of yesterday's late selloff. One thing that might mitigate any widespread intention to pare the recent gains is the optimism now surrounding social-networking icon Facebook (FB). That company, domiciled on the NASDAQ, tallied better-than-expected metrics after the close of trading yesterday, and Facebook shares are ticking a bit higher in the pre-market this morning. – Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.