U.S. equities ended lower, with the S&P 500 Index retreating from its all-time high.
Chinese business activity data was again soft and domestic regional manufacturing output unexpectedly dropped, ahead of tomorrow’s key U.S. non-farm payroll and national manufacturing reports.
Treasury yields were lower, along with the U.S. dollar and crude oil prices, while gold was higher.
The Dow Jones Industrial Average fell 140 points (0.5%) to 27,046
The S&P 500 Index lost 9 points (0.3%) to 3,038
The Nasdaq Composite decreased 12 points (0.1%) to 8,292
In heavy volume, 1.1 billion shares were traded on the NYSE and 2.2 billion shares changed hands on the Nasdaq
WTI crude oil fell $0.88 to $54.18 per barrel and wholesale gasoline was down $0.03 at $1.59 per gallon
The Bloomberg gold spot price was $15.88 higher at $1,511.54 per ounce
The Dollar Index—a comparison of the U.S. dollar to six major world currencies—declined 0.4% to 97.31
Personal income and spending rise, along with jobless claims, regional manufacturing falls
Personal income rose 0.3% month-over-month in September, matching the Bloomberg forecast, and versus August’s upwardly-revised 0.5% rise. Personal spending increased 0.2%, just shy of estimates of a 0.3% increase, and following August’s favorably-revised 0.2% gain.
Weekly initial jobless claims grew by 5,000 to 218,000, versus estimates of 215,000, with the prior week’s figure being revised higher by 1,000 to 213,000. The four-week moving average dipped by 500 to 214,750, while continuing claims increased by 7,000 to 1,690,000, north of estimates of 1,679,000.
Treasuries were higher, as the yields on the 2-year and 10-year notes, along with the 30-year bond, dropped 10 bps to 1.52%, 1.70% and 2.18%, respectively.
The Chicago PMI unexpectedly fell further into a level depicting contraction (a reading below 50), dropping to 43.2 in October from September’s 47.1 level and compared to expectations of a slight improvement to 48.0. The index posted the fourth month of contraction in five and hit the lowest level since December 2015, as new orders, production, order backlog and employment all declined.
Europe and Asia mixed on data, trade and monetary policy developments
European equities finished mixed, as U.S.-China trade uncertainty flared back up after a Bloomberg report suggested the latter was doubting a long-term comprehensive deal, while the markets also digested yesterday’s third rate cut of the year out of the U.S. and today’s unchanged stance out of Japan.
The markets also sifted through a host of data, which included a softer-than-expected September m/m retail sales report from Germany and a much worse-than-expected read on U.S. regional manufacturing activity, as well as a slightly stronger-than-expected Q3 GDP report for the Eurozone. The euro dipped and the British pound gained ground versus the U.S. dollar, while bond yields in the region were lower.
Stocks in Asia finished mixed, with trade uncertainty resurfacing somewhat following a report from Bloomberg that China is casting doubt about a long-term comprehensive trade deal with the U.S. but that progress on a phase-one agreement continues. Also, the markets digested the third rate cut this year out of the U.S., which included a signal that it may pause for a bit, while the Bank of Japan kept its policy stance unchanged but hinted that a rate cut could be in the offing.
Economic growth concerns also weighed on China, after the country’s official Manufacturing and non-Manufacturing PMIs for this month showed the former unexpected contracted further and the latter’s growth slowed more than expected.
Stocks in Japan moved higher, with the yen firming slightly, as the Bank of Japan’s decision was accompanied by a larger-than-expected rise in the nation’s industrial production for September.
Company and Earnings News…
Apple reported fiscal Q4 earnings-per-share of $3.03, above the $2.83 FactSet estimate, as revenues rose 2.0% year-over-year to $64.0 billion, exceeding the Street’s expectation of $63.0 billion. The company’s iPhone, wearables, and services revenues all topped projections, while its iPad sales matched forecasts and its Mac sales came in south of estimates. Apple issued Q1 revenue guidance—the key holiday shopping season—that had a midpoint north of expectations.
Facebook posted Q3 EPS of $2.12, above the projected $1.91, with revenues growing 29.0% y/y to $17.7 billion, topping the expected $17.4 billion. The social network’s daily and monthly active users both matched expectations, while its advertising revenues bested estimates.
Starbucks announced fiscal Q4 earnings of $0.67 per share, or $0.70 ex-items, versus expectations of $0.70, as revenues rose 7.0% y/y to $6.8 billion, exceeding the $6.7 billion that was expected. Global same-store sales increased 5.0% y/y, exceeding the estimated 4.0% gain. SBUX issued 2020 EPS and revenue guidance that was just shy of estimates, while announcing a 14.0% increase of its quarterly dividend to $0.41 per share.
Kraft Heinz reported Q3 profits of $0.69 per share, compared to the estimated $0.53, as revenues declined 4.8% y/y to $6.1 billion, roughly in line with forecasts, reflecting negative impacts from divestitures and currency, while its organic sales dipped—but came in above estimates—as increased pricing in the U.S. and other international segments more than offset lower pricing in Canada.