Closing Market Summary: Stocks End Strong Month on Cautious NoteThe stock market ended the week on a lower note, but that did not stop the S&P 500 from posting its largest monthly gain since October 2011. The benchmark index lost 0.5% on Friday, but surged 8.3% for the month while the Nasdaq Composite (-0.4%) outperformed, spiking 9.4% in October.
Broadly speaking, the Friday session was very quiet with the market showing a modest loss during morning action, which turned into a slim afternoon gain; however, a late slide from session highs ensured a lower finish for the S&P 500.
Despite the lower finish, only five of ten sectors posted losses, but relative weakness in heavily-weighted groups like financials (-1.3%), technology (-0.8%), and consumer staples (-1.1%) was enough to keep the market pressured.
The financial sector retreated throughout the day, narrowing its October gain to 6.1%. Meanwhile, the top-weighted technology space (-0.8%) also underperformed, but the influential sector surged 10.7% in October. Large cap names like Apple (AAPL 119.50, -1.03), Google (GOOGL 737.39, -7.46), and Microsoft (MSFT 52.64, -0.72) struggled on Friday, masking relative strength in the PHLX Semiconductor Index, which rose 0.9%. ON Semiconductor (ON 11.00, +0.72) was a notable standout, soaring 7.0%, in reaction to better than expected results.
Elsewhere, the consumer staples sector (-1.1%) retreated amid disappointing earnings and/or guidance from Colgate-Palmolive (CL 66.35, -2.88), CVS Health (CVS 98.78, -5.02), and Boston Beer (SAM 219.42, -25.52). The three names lost between 4.2% and 10.4% while the broader sector narrowed its October gain to 5.6%.
On the flip side, the energy sector (+0.7%) finished in the lead after struggling at the start. However, the sector climbed during the afternoon to extend its October gain to 11.3%. Crude oil contributed to the afternoon rally as WTI crude rose 1.2% to $46.60/bbl while earnings also played a part. To that point, Chevron (CVX 90.88, +0.99), ExxonMobil (XOM 82.74, +0.51), and Phillips 66 (PSX 89.10, +2.67) all delivered better than expected results.
Unlike stocks, Treasuries spent the bulk of the day in the green with the 10-yr yield slipping three basis points to 2.15%.
Today's participation was ahead of average with more than a billion shares changing hands at the NYSE floor with month-end flows contributing to the increased activity.
Economic data included Employment Cost Index, Personal Income/Spending data, Chicago PMI, and Michigan Sentiment:
- Employment costs increased 0.6% in Q3 2015, up from a 0.2% increase in the second quarter while the consensus expected an increase of 0.5%
- Despite the big quarterly gain, year-over-year trends were unchanged with total compensation increasing only 2.0% in the third quarter, which matched the rate of increase from the second quarter
- Personal income increased 0.1% in September after increasing an upwardly revised 0.4% (from 0.3%) in August while the consensus expected an increase of 0.2%
- Personal spending rose 0.1% in September after increasing 0.4% in August while the consensus expected an increase of 0.2%
- The Chicago PMI increased to 56.2 in October from 48.7 in September while the consensus expected an increase to 49.0
- That was the best reading in the Chicago PMI since reaching 59.4 in January
- The Production Index increased to 63.4 in October from 43.6 in September, representing the largest one-month gain since August 2014
- The University of Michigan Consumer Sentiment Index was revised down to 90.0 in the final October reading from 92.1 in the preliminary report while the consensus expected a revision up to 92.6
- Despite the downward revision, sentiment remains stronger than the final September (87.2) level
- The Current Conditions Index was revised down to 102.3 in the final October reading from 106.7 while the Expectations Index was revised down to 82.1 from 82.7