After The Close - The major U.S. equity indexes turned in a good showing today, though the trading day was pretty dull from a headline standpoint. By the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index were modestly higher. Most of the positive action was in the mid- and small-cap markets, as reflected in the outsized gains by the S&P Mid-Cap 400 Index and the Russell 2000. Investors seemed to be more willing, at least compared to last week, to add more risk to their portfolios today. There were minimal negative stories from either Wall Street or Main Street to derail the bulls. Overall, advancing issues led decliners by a comfortable margin on both the Big Board and the NASDAQ, to the tune of around two to one on both.
From a sector perspective, the 10 major groups traded in a tight band around the neutral line, but most of them ended the session in positive territory. There was mild leadership from the energy and basic materials stocks. Within the energy sector, the downtrodden coal stocks were the big winners in the latest session. In the same vein, shares of the steel and aluminum makers were in high demand. Upgrades for the stocks of AK Steel (AKS) and U.S. Steel (X) from a major investment bank helped those shares and the industry as a whole. On the other hand, there was softness in the consumer staples and technology sectors.
On the earnings front, the day was high on volume, but short on attention grabbers. Of note was the latest quarterly results from Kellogg Company (K). The cereal and snacks maker reported in-line results, and the shares moved modestly higher as investors were pleased to hear that the company will restructure its operations via workforce reductions. Meantime, surprising to the upside was Extreme Networks (EXTR)—and the small-cap stock finished nicely higher on the quarterly report. There also was some noteworthy non-earnings news from Corporate America. Specifically, shares of UTStarcom (UTSI) and Blackberry (BBRY) fell sharply after both companies announced that they are no longer looking like they will be acquired, at least for the time being.
Much like the earnings beat, there was little of note from an economic standpoint. However, we did learn from the Commerce Department that new orders for manufactured goods were up 1.7% in September, following two consecutive monthly decreases, including a 0.1% decrease in August. Excluding transportation component, new orders decreased 0.2%, which was slightly worse than what economists were looking for. The economic news heats up later this week with reports due on nonmanufacturing activity (tomorrow), third-quarter GDP (Thursday), and employment (Friday).
All in all, it was uneventful day on Wall Street. Volume was rather tepid throughout the session with, as noted, the news on earnings and the economy being light as well, at least from an attention-grabbing standpoint. With earnings season starting to wind down this week, the economy and the role of the Federal Reserve will get more of the investment community’s attention in the coming weeks. -William G. Ferguson
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
12:30 PM EST - The U.S. stock market is putting in a mixed, and somewhat choppy, session today. At past noon in New York, the Dow Jones Industrial Average is down 10 points; but the broader S&P 500 Index is up two points; and the NASDAQ is ahead almost seven points. Market breadth suggests a slightly positive bias to today’s trading, as advancing stocks are just ahead of decliners on both the NYSE and the NASDAQ. The market sectors are divided, with notable strength now found in the basic materials issues. Also, the energy stocks are advancing. In contrast, there is some weakness in the financials and the utilities are out of favor, yet again.
Technically, the S&P 500 Index has been moving in a sideways range over the past few sessions. But, after the large run logged over the past few weeks, some consolidation is likely in order here. Notably, we have not yet seen any serious bouts of profit taking, accompanied by large increases in trading volumes, and that likely suggests that the bulls are committed to the rally, for now.
The markets here in the U.S. probably got some help from the trading overseas. Notably, in Europe the bourses put in a good session, helped by some decent economic reports issued in several major countries. More recently, there has been a sense that the situation on the Continent is gradually firming up, and that may help sentiment on our shores. It is important to remember that concerns about Europe’s sovereign-debt levels and the strength of the euro had contributed to some of the volatility seen in our equity markets in the past. Meanwhile…
Traders received a couple of economic reports this morning. Factory orders declined 0.1% in August, which fell short of expectations. However, more recently, orders reversed course, rising 1.7% in September. This showing was, more or less, as expected. While there are quite a few issuances due out this week, traders will ultimately be looking ahead to the October employment report due out on Friday.
Finally, it has been a somewhat quiet day for corporate news. However, BlackBerry (BBRY) stock is off sharply, as the mobile device maker has abandoned plans to sell all or part of that business. Meanwhile, Sysco (SYY) put out a decent report, and that stock is up. Vulcan Materials (VMC) is also seeing its shares rise, as that company put out a good set of numbers, too. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Stocks to Watch from The Survey – It’s still earnings season, but the big news this morning is on the M&A front. Indeed, shares of BlackBerry (BBRY) are plunging ahead of the bell, after the struggling smartphone maker’s plan to sell itself fell through. Instead, the company is letting go its CEO and raising roughly $1 billion in capital from institutional investors.
There is some earnings news out, however, and shares of packed foods maker Kellogg (K), switching solutions provider Extreme Networks (EXTR), and Berkshire Hathaway (BRK/B), the conglomerate controlled by legendary investor Warren Buffett, are all up in pre-market trading after reporting quarterly results, with EXTR showing considerable strength. – 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 - The old month ended and the new month began, and at least as far as the Dow Jones Industrial Average was concerned the beat just went on, with that index extending its gains of the previous month and the year to date. True, this latest market advance didn't have the glamour of some October gains, as the most recent session's uptick had a very selective look to it. Indeed, the market was, at best, mixed on the day, with the Dow, the Standard and Poor's 500 Index, and the tech-laden NASDAQ gaining 70, five, and just two points, respectively, with only a late buying rush keeping the latter index out of the red.
Once again, earnings dominated the action with a little nudge from the economy thrown in for good measure. On the first count, the day saw some beats and misses, as has been the pattern of late, with the most notable large-cap disappointment being provided by oil and gas giant and Dow-30 component Chevron (CVX – Free Chevron Stock Report). That stock, among the more stable in the investment universe, took the miss in stride losing ground only grudgingly. The same could not be said for a number of NASDAQ issues, which likely explains that composite's relative underperformance on the day. The small-cap Russell 2000 eased a bit, meanwhile, although the late buying pared its deficit notably. Meanwhile, losing stocks edged out gainers on both the Big Board and the NASDAQ, thereby keeping that unenviable modest string alive for one more day. Encouragingly, though, the differential narrowed as the day wore on as he major indexes firmed up a bit near the close.
Meantime, the economy factored into the day's action, too, albeit not materially so. To wit, the Institute for Supply Management, an industry trade group, reported that its monthly gauge of manufacturing activity had risen to its highest level since April of 2011 in October, following by one day, an even stronger industrial report out of the Chicago area. That one-two punch would suggest that the now four-and-a-half year-long business expansion remains securely in place, notwithstanding the recent government shutdown drama on Capitol Hill. As for Wall Street, even with the choppier pattern over the last three sessions, the Dow, the S&P, and the NASDAQ remain strongly higher on the year, with average gains in and around the 20% mark.
Still, we have two months to go in the fast-concluding year and a lot can happen in such a short span of time. For now, though, the bulls remain in the driver's seat. Here's why, we think: The economy is growing fast enough to keep most companies posting better earnings, but not so fast as to shift the Federal Reserve off of its accommodative monetary course. Recent economic surveys and the latest musings from the central bank would suggest that the business and profit results will continue on their merry way for a while longer. Thus, notwithstanding frothy valuations, the bull could well continue to run for a while.
Meanwhile, as we look out to a new week, we find that the heavy flow of earnings will now retreat a bit, but the economic news will continue to flow in. Of note here, will be the companion non-manufacturing index from the Institute for Supply Management (which will be issued tomorrow), the first look at third-quarter gross domestic product (on Thursday), and next Friday, the long-anticipated and modestly delayed look at October payrolls and the unemployment rate for that month. These are the three headline reports of the week. Alongside those data points, we also will get data on factory orders this morning, the leading indicators on Wednesday, jobless claims on Thursday, and personal income, consumer spending, and consumer sentiment on Friday.
Earnings, too, will be issued, although as noted, with less frequency. Among the headliners here will be profit reports on cereal maker Kellogg (K), electrical equipment powerhouse Emerson Electric (EMR), and Dow-30 component and entertainment giant Walt Disney (DIS – Free Disney Stock Report).
As to the markets in the new week, our equity futures are up once more, with the gains building over the course of the morning, suggesting that equities will head nicely higher when trading commences in less than an hour from now. – Harvey S. Katz
At the time of this article's writing, the author had positions in DIS