U.S. equities pared early gains to finish mixed, as conviction tempered in the final session of a bumpy week, with anxiety surrounding the Fed’s tightening campaign and global trade, exacerbated by China’s disappointing Q3 GDP report, joining yesterday’s increased worries about Italy’s fiscal plans.
the Dow was able to remain in the green, getting a boost from upbeat earnings reports from members Procter & Gamble and American Express.
Treasury yields were higher after housing data disappointed, and the U.S. dollar lost ground, while crude oil prices bounced back from a recent tumble and gold also gained ground.
The Dow Jones Industrial Average rose 65 points (0.3%) to 25,444
The S&P 500 Index decreased 1 point to 2,768
The Nasdaq Composite fell 36 points (0.5%) to 7,449
In heavy volume, 937 million shares were traded on the NYSE and 2.5 billion shares changed hands on the Nasdaq
WTI crude oil gained $0.47 to $69.12 per barrel and wholesale gasoline was up $0.02 at $1.91 per gallon
The Bloomberg gold spot price added $0.78 to $1,226.59 per ounce
The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% lower at 95.72
Markets were mixed for the week, as the DJIA rose 0.4%, the S&P 500 Index was nearly flat and the Nasdaq Composite lost 0.6%
Existing home sales fall more than expected
Existing-home sales in September dropped 3.4% month-over-month to an annual rate of 5.15 million units, from August’s lower-revised 5.33 million rate, and compared to the Bloomberg forecast of a 5.29 million pace. Sales of single-family homes and multi-family structures were down compared to last month and the prior year.
The median existing-home price was 4.2% higher y/y to $258,100, marking the 79th straight month of gains. Unsold inventory came in at a 4.4-months pace at the current sales rate, up from 4.2 months a year ago. Inventory of homes for sale was down m/m but up y/y. Sales declined m/m in the Northeast, South and West, and were unchanged in the Midwest.
Treasuries were modestly lower, as the yield on the 2-year note rose 3 basis points to 2.90%, and the yields on the 10-year note and the 30-year bond ticked 1 bp higher to 3.19% and 3.37%, respectively.
The U.S. dollar declined and the stock markets pared an early advance amid flared-up risk aversion. This was fostered by lingering Fed tightening and global trade concerns being met with Italian fiscal uneasiness after European Central Bank (ECB) President Mario Draghi warned the region about challenging European Union rules and the European Commission scrutinized Italy’s recently approved budget accord.
Europe and Asia mixed amid China data and commentary
European equities finished mixed, coming off yesterday’s late-day slide and the sharp drop in the U.S. as continued scrutiny toward Italy’s spending plans appeared to unnerve the markets. Sentiment likely remained a bit shaky in the wake of China’s softer-than-expected Q3 GDP growth, though the continued upbeat earnings season unfolding in the U.S. may have helped limit some of the uneasiness, along with China’s verbal intervention overnight that helped Chinese markets recover. Energy issues showed some strength, with crude oil prices rebounding from a recent pullback and following some upbeat earnings guidance in the sector. The auto sector continued to be hamstrung, exacerbated by a solid drop in shares of Michelin after the company issued a sales warning for the second half of the year. The group was also pressured by a solid decrease in Daimler AG after the Mercedes-Benz maker issued a profit warning.
The euro and British pound were higher versus the U.S. dollar, while bond yields in the region were mixed. Italian bond yields reversed noticeably to the downside and the nation’s stock markets overcame early losses, after an EU official offered comments that appeared aimed at calming yesterday’s tensions that flared-up. U.K. Brexit remained a focal point and Prime Minister Theresa May sounded a cautiously-optimistic tone regarding progress in talks between the region and the EU, even though a summit this week failed to yield any major breakthrough.
Stocks in Asia finished mixed on the heels of yesterday’s drops in the U.S. and Europe as already-skittish global sentiment was exacerbated by flared-up Italian fiscal concerns. Also, the markets digested a host of Chinese economic data, headlined by the nation’s Q3 GDP report that showed growth slowed to a 6.5% y/y pace—the lowest since 2009—from 6.7% in Q2 and below the expected expansion of 6.6%.
China’s industrial production came in below estimates for last month, but September retail sales increased more than anticipated. However, the data was countered by comments from China’s central bank and top regulators pledging financial support aimed at reassuring the markets in the wake of the recent tumble in stocks.
As such, stocks in China reversed to the upside and rallied higher and those traded in Hong Kong also advanced. Japanese equities trimmed early losses and finished lower, with the yen giving back some of yesterday’s gains, while securities in Australia dipped and South Korean listings traded slightly to the upside.
Markets in India returned to action following yesterday’s holiday break, falling sharply amid continued uneasiness regarding liquidity and banking sector concerns, which have joined festering worries toward the emerging markets.
WEEKLY RECAP – Stocks mixed to close out choppy week
Stocks finished the week mixed in choppy trading, with the Dow following up a 500-point rally on Tuesday with a 300-point drop on Thursday. Volatility remained elevated as uneasiness regarding a potential Fed monetary policy mistake lingered, trade uncertainty festered, emerging market worries continued, and Italy’s fiscal issues flared-up.
Earnings season continued to ramp up, thus far setting a mostly positive tone, with Dow members UnitedHealth Group Inc. and Johnson & Johnson bolstering the health care sector, Netflix Inc trouncing subscriber growth expectations, and United Continental Holdings Inc’s revenue growth overshadowing a “steep increase in fuel costs,” while Dow member Goldman Sachs Group Inc. and Morgan Stanley continued to show the financial sector remains relatively healthy.
With results from 85 S&P 500 companies in the books, about 65% have topped sales estimates and approximately 87% have bested profit projections. Consumer staples led to the upside, bolstered by Friday’s earnings results from Dow member Procter & Gamble, and as the markets appeared to remain a bit defensive, which likely weighed on consumer discretionary issues and helped real estate stocks shrug off another dose of disappointing housing data and some relatively regained momentum in Treasury yields.
Industrials, materials and energy sectors were also bogged down by the aforementioned global market uneasiness, exacerbated by more commentary suggesting an impact of trade tensions, while crude oil prices posted a back-to-back weekly drop in the wake of a recent rally to multi-year highs. The U.S. dollar nudged higher as the minutes from the Fed’s September meeting preserved expectations the Fed will maintain its rate hike campaign. Outside data on housing and autos, the economic landscape continued to look strong, with the retail sales control group figure topping forecasts, along with industrial production, while job openings hit a fresh record high and Leading Indicators continued to grind higher.
Although next week the “meat” earnings season will likely take top billing, with the markets scrutinizing company guidance and commentary, the economic calendar will also likely command some attention, headlined by Friday’s first look (of three) at Q3 GDP. Growth in economic output is predicted to decelerate but remain at a healthy annualized quarter-over-quarter rate of 3.4%, from Q2′s solid 4.2% expansion.