After The Close - The U.S. stock market put in a mixed showing today, but with some areas of strength. Notably, at the end of the session, the Dow Jones Industrial Average was up 129 points to an all-time record; the broader S&P 500 Index was ahead eight points; but the technology-heavy NASDAQ was lower by eight points. Market breadth was mixed, as advancing stocks were about even with decliners on the NYSE and on the NASDAQ. However, most of the market sectors managed to make progress today, with decent gains in the volatile basic materials issues. The consumer non-cyclical names also advanced, and the high-yielding utilities had a good session. In contrast, there was considerable weakness in the healthcare area, with sharp losses in many of the biotechnology issues.
Technically, the S&P 500 Index continues to drift sideways, suggesting some consolidation is likely taking place. The market may well be taking a breather, as the generally favorable September earnings season winds down, and traders look elsewhere for direction. The VIX closed lower today, suggesting that the mood is still positive, if not overly so.
There was little economic news released this morning. However, the Conference Board’s Leading Economic Indicators report registered a 0.7% increase in September, which was just slightly better than analysts had expected. Tomorrow, the employment situation will be back in the spot light, as we get a look at the weekly initial and continuing jobless claims. We are also set to receive the initial estimate for third-quarter GDP, as well as a consumer credit report. However, traders are likely looking ahead to Friday morning, when the October Employment report is slated to be released. As many know, that report is widely followed, and can easily move the markets, one way or the other.
Meanwhile, traders received a few more earnings reports to mull over today. Among the larger names, Abercrombie & Fitch (ANF) stock dropped after the apparel retailer issued somewhat softer-than-anticipated guidance. In addition, electric car maker Tesla (TSLA), which has been a big gainer lately, fell sharply on news that deliveries of some models may fall short of expectations. - 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 - The major U.S. equity indexes, with the exception of the technology-heavy NASDAQ, started the session nicely to the upside, and for the most part, have held those gains and fought back against attempts from the bears in the late morning hours. Thus, as we pass the midday hour on the East Coast the Dow Jones Industrial Average and the broader S&P 500 Index are comfortably in positive territory. Still, owing to the decline in the NASDAQ Composite, mostly on the softness in the technology and consumer discretionary sectors, the weakness in the small-cap Russell 2000, and the uneven advance/decline data on the New York Stock Exchange and the NASDAQ, the overall equity market performance could be termed mixed.
From a sector perspective, nearly all of the 10 major groups are in positive territory, but for a few of the sectors the advances have not taken them very far above the neutral line. In fact, the technology, consumer discretionary, healthcare, and industrial sectors spent part of the morning in the red. However, leadership is coming from yesterday’s laggards, including the energy issues. A jump in oil prices, which have been in retreat the last few months, is helping the energy issues, while the telecom and utilities seem to be benefiting from some sector rotation. The recent pullback in the yields on fixed-income securities are making these higher-yielding equities more desirable for income-oriented investors.
Meantime, the earnings news from Corporate America, which has been mostly positive during the third quarter earnings season, was mixed today. Specifically, shares of automobile maker Tesla Motors (TSLA) and apparel retailer Abercrombie & Fitch (ANF) are notably lower after reporting quarterly results. The weakness in those stocks is weighing on the consumer discretionary stocks thus far today. On the other hand, the stocks of brewer Molson Coors (TAP), entertainment company Time Warner (TWX), and drugmaker Hospira (HSP) are all moving higher after reporting their latest earnings results.
The news on the economy on a rather light day was also encouraging. This morning, the Conference Board reported that the leading indicators rose 0.7% in September to a reading of 97.1. That follows a similar gain in August and marked the fifth increase in the last six months. The survey, which is a gauge of the U.S. economy's future health, also showed that the economy was making gains before the government shut down for 16 days. The leading indicators reports comes ahead of the much-anticipated third-quarter GDP reading (tomorrow) and monthly figures for the labor market (Friday). Both of these reports could be viewed as game changers for equity market participants.
Looking ahead to the second half of trading, the bulls will be looking to keep the good times rolling. However, if recent trading days have taught us anything, a response from the bears can’t be ruled out. In such sessions, when all is said and done, the major equity indexes have not been too far removed from the breakeven line on most occasions. Based on that trend, and the fact that decliners are leading advancers on the NASDAQ, we would not be surprised if the bears posed a threat in the final hours of trading. Stay tuned. - William G. Ferguson
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 – Earnings season continues, with electric vehicle manufacturer Tesla Motors (TSLA) in the spotlight. The automaker’s third-quarter results were better than expected, but investors took issue with the company’s outlook and the equity is down sharply ahead of the bell as a result. The stock of Abercrombie & Fitch (ANF) is also indicating a notably lower opening this morning, after the apparel retailer issued disappointing preliminary October-period results and offered a lackluster outlook. Other issues moving lower in the premarket on earnings news include health insurer Humana (HUM) and media company Twenty-First Century Fox (FOXA). It was not all bad news, however, and shares of brewer Molson Coors (TAP), entertainment company Time Warner (TWX), and drugmaker Hospira (HSP) are all up in pre-market trading after reporting quarterly results. – 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 Monday-Tuesday reversal, which is a frequent event on Wall Street, appeared as though it would be back in vogue again this week. To wit, after the stock market rose somewhat grudgingly, but also quite broadly, to start out the current week, concerns about economic growth in Europe, and a consequent drop in the bourses on the Continent early yesterday, pushed our own equity futures down rather notably in the pre-market.
However, after an initial selloff during live trading that pushed the 30-stock Dow Jones Industrial Average lower by some 115 points at its nadir, the market started to come back. Most likely it was a case of the dour business news in Europe--where the consensus seems to be that the nation's on the Continent may revive more slowly than some had been forecasting--was offset by encouraging business metrics on our shores. Specifically, at 10:00 (EST), the Institute for Supply Management, the Arizona-based trade group, which had issued some compelling numbers on manufacturing activity late last week, released equally upbeat results on its closely watched non-manufacturing, or service-sector, survey.
Armed with this report, and hopes that the rest of the week, which will be headlined by reports on third-quarter GDP and October employment growth and the unemployment rate, will be reasonably good, the equity market tried to reverse course, and for a time in the early afternoon, the three principal large-cap indexes were posting gains, albeit narrow ones. However, when the comeback did not prove even more formidable, the rally was cut short, although no significant reversal ensued. By the close, the Dow had surrendered a mere 22 points, while the Standard and Poor's 500 Index was a handful of points lower. But the NASDAQ, boosted by some selective strength in the tech area, notably from old-line players, such as Cisco Systems (CSCO – Free Cisco Stock Report) and Microsoft (MSFT – Free Microsoft Stock Report), managed a slim three-point gain. Thus, technically, the Monday-Tuesday reversal did hold true to form, although neither day featured much in the way of notable price movement in the aggregate.
Overall, earnings and the economy are taking the lion's share of investors' attention these days, and that is a welcome change from a month ago when the doings in Washington were all the rage. Now, even on Election Day, it was business as usual on Wall Street. And, in the end, that is likely a bullish sign.
Meanwhile, the comings and goings on the profit side and in the economy are favoring the bulls. Earnings season, which is now fast winding down, has been a good one, notwithstanding some disappointments along the way, such as a less-than-welcoming forecast from car maker Tesla Motors (TSLA), which reported just after the close yesterday, and that issue, which closed at $176.81 a share in regular trading yesterday, is indicating a notably lower opening this morning, to the tune of some 20 points, or so.
Then, there is the economy, which today is headlined by another listless metric out of Europe, where the Eurozone PMI Composite Output Index fell from a 27-month high of 52.2 in September to 51.9 in October. Now, that is not a really worrisome number, but it does suggest that the recovery on the Continent will likely come in fits and starts, rather than in a straight line. Still, this reading was above the estimate of 51.5, and thus not likely to cause much stirring over here.
On point, our equity futures are up quite strongly in the pre-market this morning, with the Standard and Poor's 500 Index futures ahead by almost eight points and the NASDAQ futures better by more than 11 points. As to our day ahead, earnings reports will be rather heavy again as we wind up the reporting season with a number of releases from some smaller players as well as a few larger names. Also, the Conference Board will be issuing its leading indicators figures, where a solid 0.7% increase is the forecast for September following a like gain in August. – Harvey S. Katz
At the time of this article's writing, the author had positions in CSCO.