S&P 500 gains as earnings results, Brexit news uphold sentiment
17-Oct-19 16:20 ET
Dow +23.90 at 27025.88, Nasdaq +32.67 at 8156.86, S&P +8.26 at 2997.95
briefing.com
[BRIEFING.COM] The S&P 500 advanced 0.3% on Thursday, as investor sentiment remained relatively upbeat following another batch of decent earnings reports and news of a draft Brexit deal. Price action didn't reflect buying confidence, though, as the benchmark index wavered mostly below its opening levels during the session to close below the 3000 level.
The Dow Jones Industrial Average increased 0.1%, and the Nasdaq Composite increased 0.4%. The Russell 2000 rose 1.1% to outperform its large-cap peers.
Gains were still registered in ten of the 11 S&P 500 sectors, though, with the lone exception being information technology (-0.2%) after IBM (IBM 134.26, -7.85, -5.5%) missed revenue estimates. The health care (+0.8%), real estate (+0.7%), and communication services (+0.6%) sectors outperformed the broader market.
In the industrials sector (+0.5%), positive reactions to results from Honeywell (HON 167.55, +3.92, +2.4%), CSX (CSX 69.78, +0.78, +1.1%), United Rentals (URI 127.92, +6.25, +5.1%), and Dover (DOV 101.38, +5.56, +5.8%) outweighed the relative weakness in the defense stocks after Textron (TXT 47.79, -2.68, -5.3%) commented about lower defense volume.
The health care space presumably outperformed on optimism that a $50 billion package offered by five companies could settle the opioid lawsuits. Companies involved include Johnson & Johnson (JNJ 136.17, +1.00, +0.7%), Teva Pharma (TEVA 7.77, +0.82, +11.8%), McKesson (MCK 150.51, +5.67, +3.9%), Cardinal Health (CAH 51.21, +2.14, +4.4%), and AmerisourceBergen (ABC 89.50, +3.45, +4.0%).
The UK and EU announcing a Brexit agreement might have given investors some relief, but enthusiasm was kept in check after several parties expressed their disapproval in front of a crucial vote in Parliament this weekend. The Europe Stoxx 600 declined 0.1% on Thursday.
In other earnings news, Netflix (NFLX 293.35, +7.07, +2.5%) provided results that were construed as better than feared. Shares gained 2.5% but were up as much as 7.9% intraday. Morgan Stanley (MS 43.44, +0.65, +1.5%) topped expectations.
U.S. Treasuries finished the session on a lower note. The 2-yr yield increased two basis points to 1.61%, and the 10-yr yield increased one basis point to 1.76%. The U.S. Dollar Index declined 0.4% to 97.62. WTI crude rose 0.9%, or $0.47, to $53.89/bbl despite crude inventories rising more than expected in the EIA's weekly inventory report.
Reviewing Thursday's economic data:
- Total housing starts declined a disappointing 9.4% m/m in September to a seasonally adjusted annual rate of 1.256 million (Briefing.com consensus 1.306 million). Building permits declined 2.7% to a seasonally adjusted annual rate of 1.387 million (Briefing.com consensus 1.350 million).
- The key takeaway from the Housing Starts and Building Permits report is that the month-over-month weakness was a function of downturns for multi-unit dwellings. Single-family starts were up 0.3% to 918,000 while single-family permits were up 0.8% to 882,000.
- Initial claims for the week ending October 12 increased by 4,000 to 214,000 (Briefing.com consensus 215,000). Continuing claims for the week ending October 5 decreased by 10,000 to 1.679 million.
- The key takeaway from the initial claims report is that it bodes well for another solid increase in October nonfarm payrolls, as this report covers the period in which the survey for the October employment report was conducted.
- Industrial production declined 0.4% m/m in September (Briefing.com consensus -0.3%) on the heels of an upwardly revised 0.8% increase (from 0.6%) in August. Total capacity utilization dropped to 77.5% (Briefing.com consensus 77.7%) from 77.9% in August.
- The key takeaway from the report is that the weakness was unduly influenced by the strike at General Motors (GM), which contributed to a 0.7% decline in the manufacturing output for durables.
- The Philadelphia Fed Index for October checked in at 5.6 (Briefing.com consensus 6.0) versus 12.0 in September.
Looking ahead, investors will receive the Conference Board's Leading Economic Index for September on Friday.
- Nasdaq Composite +22.9% YTD
- S&P 500 +19.6% YTD
- Dow Jones Industrial Average +15.9% YTD
- Russell 2000 +14.3% YTD
Market Snapshot
| Dow | 27025.88 | +23.90 | (0.09%) | | Nasdaq | 8156.86 | +32.67 | (0.40%) | | SP 500 | 2997.95 | +8.26 | (0.28%) | | 10-yr Note | -1/32 | 1.758 |
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| | NYSE | Adv 1875 | Dec 973 | Vol 729.5 mln | | Nasdaq | Adv 1987 | Dec 1084 | Vol 1.8 bln |
Industry Watch
| Strong: Health Care, Real Estate, Communication Services |
| | Weak: Information Technology, Energy | |
