Closing Stock Market SummaryThe S&P 500 declined 0.1% on Tuesday, although it did set a new intraday high in this lackluster session. Earnings reports remained in focus ahead of key developments later in the week, which presumably kept buying conviction in check today.
The Dow Jones Industrial Average also declined 0.1%. The Nasdaq Composite underperformed with a 0.6% loss, while the Russell 2000 managed to gain 0.3%.
An earnings miss from Alphabet (GOOG 1262.62, -27.38, -2.1%) contributed to some profit taking in the stock and in other strong technology stocks like Apple (AAPL 243.29, -5.76, -2.3%). In addition, the selloffs in Beyond Meat (BYND 81.99, -23.42, -22.2%) and GrubHub (GRUB 33.11, -25.28, -43.3%) following their results had some investors feeling less interested in high-beta names.
In turn, the S&P 500 communication services (-1.0%), information technology (-0.9%), and consumer discretionary (-0.6%) sectors, where many of these companies reside, weighed on the broader market. Fortunately, the market found some support in the health care (+1.2%), materials (+0.7%), energy (+0.4%), and real estate (+0.4%) sectors.
Pfizer (PFE 38.21, +0.93, +2.5%) and Merck (MRK 85.11, +2.91, +3.5%) provided the lift for the health care space after both reported positive quarterly results and upbeat guidance. Other blue-chip companies with less-demanding valuations like General Motors (GM 38.21, +1.57, +4.3%), Kellogg (K 62.87, +1.81, +3.0%), Xerox (XRX 34.40, +3.61, +11.7%), and Ingersoll-Rand (IR 127.86, +5.78, +4.7%) also pleased investors with their earnings reports.
Separately, Johnson & Johnson (JNJ 129.12, -0.06, unch) announced that "rigorous and third-party testing confirms there is no asbestos in Johnson's Baby Powder." Shares were halted for trading and did not reopen before the market closed. Shares of Boeing (BA 348.93, +8.05, +2.4%) reacted favorably to CEO Dennis Muilenburg's testimony before the Senate.
U.S. Treasuries crept higher in an equally lackluster session. The 2-yr yield and the 10-yr yield both declined one basis point to 1.64% and 1.84%, respectively. The U.S. Dollar Index declined 0.1% to 97.69. WTI crude declined 0.3%, or $0.19, to $55.76/bbl.
Reviewing Tuesdays' economic data, which included Conference Board's Consumer Confidence Index for October, Pending Home Sales for September, and the S&P Case-Shiller Home Price Index for August:
- The Conference Board's Consumer Confidence Index slipped to 125.9 in October (consensus 127.5) from an upwardly revised 126.3 (from 125.1) in September.
- The key takeaway from the report is that there wasn't any material change from the prior month despite lingering worries about trade and economic growth prospects, suggesting overall feelings about job security remain an underpinning for consumer confidence.
- Pending Home Sales increased 1.5% in September (consensus +0.7%). Today's reading follows a revised 1.4% increase in August (from 1.6%).
- The S&P Case-Shiller Housing Price Index for August increased 2.0% (consensus 2.5%) following an unrevised 2.0% increase in the prior month.
Looking ahead, investors will receive the FOMC rate decision, the advance estimate for Q3 GDP, the ADP Employment Change report for October, and the weekly MBA Mortgage Applications Index on Wednesday.
- Nasdaq Composite +24.7% YTD
- S&P 500 +21.1% YTD
- Russell 2000 +17.0% YTD
- Dow Jones Industrial Average +16.1% YTD
Fiat Chrysler, Peugeot Owner PSA in Talks to Combine
Combination could create $50 billion auto giant
BREAKING NEWS
* Fiat Chrysler FCAU +7.97% and Peugeot Owner PSA In Talks To Combine--Sources
*One Option For Fiat, Peugeot Combination Is All-Share Merger--Source
*Fiat, Peugeot Combination Could Create $50 Bln Auto Giant
*Fiat Chrysler Earlier This Year Dropped Plans to Merge With Renault
L'Oréal Beats Sales Forecasts as Growth Picks up in Third Quarter
Sales were up 11 percent to €7.18 billion as the cosmetics giant retained momentum the key Asian market, despite turmoil in Hong Kong.
PARIS, France — Sales growth at Maybelline maker L'Oréal was faster than expected in the third quarter, as momentum remained strong in across Asia, its number one market, despite turmoil in Hong Kong.
Luxury goods companies and retailers have felt the pinch following months of street protests in Hong Kong which put off visitors and forced shops to temporarily shut their doors, though some are making up for lost business in mainland China.
L'Oréal, which has done well in recent years thanks in large part to its high-end cosmetics brands like Lancôme, said on Tuesday that third quarter sales were up 11 percent to €7.18 billion ($7.98 billion).
On a like-for-like basis, which strips out currency swings and acquisitions, revenues rose 7.8 percent, largely surpassing the 6.3 percent increase expected by analysts and accelerating from the 6.8 percent growth notched up a quarter earlier.
NCAA Clears Way to Allow Athletes to Be Compensated
The decision comes a month after California passed a law requiring schools in the state to allow college athletes to earn endorsement money
*The NCAA cleared the way for college athletes to begin profiting from their name, image and likeness on Tuesday, a landmark decision that will dramatically alter the economics of college sports.
*The NCAA’s governing board directed its three competition divisions to immediately consider changing the rules governing such benefits for athletes, and to make all such changes no later than January 2021. “We must embrace change,” said Michael Drake, chair of the board and president of Ohio State University.
*The decision represents a stark shift, following years of NCAA opposition, and comes amid growing pressure from legislators, a month after California passed a law requiring schools in the state to allow college athletes to earn endorsement money.
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Gapping down
In reaction to disappointing earnings/guidance:
- GRUB -33.5%, BYND -17%, SANM -15.9%, OFIX -12%, HZO -11.9%, OI -11.7%, CR -11.3%, DBD -8.9%, SHOP -8%, SLCA -7.8%, HEXO -5.2%, AOS -4.6%, TREX -4.3%, GDI -4.1%, CGNX -3.5%, ETN -3%, BP -2.8%, HSC -2.8%, CMI -2.8%, BRX -2.2%, TCF -2.1%, MEDP -2%, ORAN -1.7%, KKR -1.5%, GOOG -1.4%, SMPL -1.4%, WIRE -1.1%, CVCO -1.1%, CNX -0.8%, IRDM -0.7%
Other news:
- XNET -10.5% (pulling back following stocks recent run higher)
- WGO -2.8% (announces private offering of $270.0 mln in aggregate principal amount of convertible senior notes due 2025)
- DTE -0.5% (commences public offering of approx. $300 mln of its common shares and 23 mln equity units)
Analyst comments:
- COMM -4.8% (downgraded to Neutral from Buy at Rosenblatt)
- PNNT -2.4% (downgraded to Underweight from Neutral at JP Morgan)
- ABMD -1.1% (downgraded to Mkt Perform from Outperform at Raymond James)
- GOLF -0.9% (downgraded to Sell from Neutral at Compass Point)