Stocks Take Slight Step Back to End October
Domestic equities finished lower in what was a choppy trading session, as investors mulled a mixed bag of earnings and economic data along with yesterday’s decision by the Federal Reserve to maintain its current pace of asset purchases.
In earnings news, Dow member Visa Inc posted inline quarterly results but offered some cautious commentary, and Starbucks Corp beat the Street’s profit expectations, while issuing disappointing guidance. Meanwhile, Facebook Inc topped analysts’ quarterly expectations but noted signs of slowing usage by teens,
Dow component Exxon Mobil Corp bested the Street’s estimates, and Expedia Inc reported stronger-than-expected earnings.
Treasuries were mixed following yesterday’s Fed decision and as a slightly higher-than-expected rate of weekly U.S. initial jobless claims was met with an unexpected jump in Midwest manufacturing activity.
The Dow Jones Industrial Average (DJIA) lost 73 points to 15,546
The S&P 500 Index dipped 7 points to 1,757
The Nasdaq Composite was 11 points (0.3%) lower at 3,920
In moderate volume, 908 million shares were traded on the NYSE, and 2.3 billion shares changed hands on the Nasdaq. Crude oil fell $0.48 to $96.29 per barrel, wholesale gasoline was $0.03 lower at $2.59 per gallon, and the Bloomberg gold spot price declined $19.93 to $1,324.62 per ounce.
Jobless claims slightly above estimates, while regional manufacturing activity jumps
Weekly initial jobless claims declined by 10,000 to 340,000 last week, just above the 338,000 level that economists surveyed by Bloomberg had expected, as the prior week’s figure was unrevised at 350,000. The four-week moving average, considered a smoother look at the trend in claims, rose by 8,000 to 356,250.
Treasuries were mixed following the data, with the yield on the 2-year note 1 basis point lower at 0.31%, while the yield on the 10-year note rose 1 bp to 2.55%, and the 30-year bond rate was nearly unchanged at 3.64%. Bond yields have moved higher in the wake of the Federal Reserve’s monetary policy decision yesterday, in which it kept its stance unchanged, as expected, maintaining its current level of asset purchases. However, the Fed made some subtle changes to its statement, omitting comments pertaining to higher mortgage rates, but pointing out that the housing market recovery has slowed somewhat in recent months.
Overseas markets mixed
The European equity markets finished mostly higher, as traders digested a plethora of earnings reports and diverging economic data in the region, along with the decision yesterday by the U.S. Federal Reserve to keep its monetary policy unchanged, as expected.
Meanwhile, economic data was mixed, with the Eurozone unemployment rate remaining at a record high of 12.2%, while German consumer confidence and retail sales both unexpectedly deteriorated. However, a separate report showed Eurozone consumer prices came in cooler than expected in October.
Stocks in Asia finished mostly to the downside as the U.S. equity markets pulled back yesterday from record highs in the wake of the Fed’s policy decision to keep its stance unchanged. Japan’s Nikkei 225 Index lost ground, as the yen strengthened versus the U.S. dollar to weigh on export-related stocks, while the Bank of Japan held its monetary policy unchanged and a report showed the country’s manufacturing activity expanded at an accelerated rate in October.
China’s Shanghai Composite Index and the Hong Kong Hang Seng Index declined, bogged down by disappointing earnings reports out of the nation’s banking sector, which overshadowed the People’s Bank of China injecting liquidity into the financial markets for the second time this week to try to alleviate concerns about a liquidity crunch in the country’s money markets.
Australia’s S&P/ASX 200 Index and South Korea’s Kospi Index fell, pulling back from yesterday’s multi-year highs ahead of tomorrow’s October trade data. Finally, India’s S&P BSE Sensex 30 Index rose, as earnings optimism received a boost following some stronger-than-expected profit reports in the nation.