Good News is Bad News Once Again

October 30, 2023

Good News is Bad News Once Again – Oct 27 Market Recap

Indices

Dow 32,417, -710 or -2.14%.
Nasdaq 12,643, -340 or -2.62%.
MSCI EAFE 1945.35, -15.05 or -0.76%.
S&P 4,117, -107 or -2.53%.
USD10Y 4.845%, -7.9bp or -1.60%.
WTI Crude $85.22/bbl, -$3.80 or -4.27%.

The week past was full of good news, but the market wanted none of it. Crude oil traded down significantly, the United Auto Workers tentatively settled their strike with Ford (F), Q3 GDP soared but jobless claims ticked up (the Fed and the market want to see more slack in the labor markets), and most importantly the Core Personal Consumption Expenditure (PCE) number while higher than last month, was in line with expectations and dropped the year-over-year number a tenth of a percent lower than the previous month. All that positive data notwithstanding, the market focused on earnings which while on balance were positive (Microsoft, Visa, IBM, AMZN), there were a number of reports that included cutting forward guidance (General Motors, Ford, UPS, AMZN) or weaker results in key business segments (Alphabet, Meta).

Next Week

Economic data will overshadow earnings this week as the only huge name reporting is Apple on Thursday. It all starts midweek with ADP Private Payrolls, the JOLTS (Job Openings and Labor Turnover Survey) number and finally the Fed’s interest rate decision which is expected to yield no change. On Friday, October Non-Farm Payrolls and Average Hourly Wages will be most watched.

Economic Calendar

Monday – N/A. Earnings: McDonalds (MCD).
Tuesday – October Consumer Confidence. Earnings: Advanced Micro Devices (AMD).
Wednesday – FOMC Interest Rate Decision. October ADP Private Payrolls, October S&P and ISM Manufacturing, September JOLTS. Earnings: Kraft Heinz (KHC), PayPal (PYPL), Qualcomm (QCOM), Yum Brands (YUM).
Thursday – Initial Jobless Claims. Earnings: Apple (APPL), Starbucks (SBUX).
Friday – October Non-Farm Payrolls, October Average Hourly Wages, October Unemployment Rate, October S&P and ISM Services. Earnings: AMC Theaters (AMC).

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Oct 27 Daily Trading Recap…

Monday – Dow –191 to 32,936, Nasdaq +35 to 13,018, S&P +0 to 4,244, USD10Y -8.2bp to 4.842%.

Tuesday – Dow +205 to 33,141, Nasdaq +121 to 13,139, S&P +30 to 4,274, USD10Y +0.2bp to 4.84%.

Ten of eleven S&P sectors traded higher, led by Utilities, Communication Services, and Real Estate.
WTI Crude has traded down $5.38 or 6.04% over the last two trading sessions.
Earnings: Microsoft (MSFT) beat topped both their earnings and revenue estimates on strong cloud growth and raised guidance in their current quarter; MSFT traded up +3.7%. Alphabet (GOOG) beat on top and bottom lines but traded down -6.07% due to slower cloud growth. Coca-Cola (KO) beat their estimates; their prices are up 9% vs this time last year. General Motors (GM) beat their numbers but traded down -2.3% as they pulled their annual guidance due to the ongoing United Auto Workers labor strike. Visa (V) beat their numbers, raised their dividend, announced a $25 billion buyback and traded up +1.3%.

Wednesday – Dow -105 to 33,035, Nasdaq -318 to 12,821, S&P -61 to 4,186, USD10Y +11.3bp to 4.953%

Nine of eleven S&P sectors traded down today, led lower by Communication Services, Consumer Discretionary, and Real Estate.
Alphabet’s slowing cloud growth crushed the Magnificent Seven today (Microsoft notwithstanding) and with it the rest of the market.
Ford (F) and the United Auto Workers have reached a tentative agreement to end the union strike. F traded up +1.92% in the extended session.
Earnings: Meta (META) beat their numbers handily yet traded down -4.17% in the regular session and a further -3.35% post close. Boeing (BA) lost more than expected on slightly better revenues and announced that they would deliver fewer 737 Max aircraft due to manufacturing flaws it discovered; BA traded down -2.54% in the regular session. International Business Machines (IBM) beat their top and bottom-line estimates and traded up +1.93% in the extended session.

Thursday – Dow –251 to 32,784, Nasdaq -225 to 12,5956, S&P -49 to 4,137, USD10Y -10.8bp to 4.845%.

Eight of eleven S&P sectors traded down today, led lower by Communication Services, Technology, and Consumer Discretionary.
Jobless claims climbed to 210,000 vs 208,000 forecast and last week’s slightly revised higher print of 200,000 (originally 198,000).
Q3 GDP soared to +4.9% vs +4.2% expected on an annualized basis.
Earnings: Amazon (AMZN) blew out their numbers and despite guided their Q4 revenues slightly lower, the stock traded up +4.89% post close. Chipotle Mexican Grill (CMG) beat earnings on inline revenues and traded up +1.86% in the extended session. Ford Motor (F) missed their earnings and revenue expectations, pulled their annual guidance due to the strike with the United Auto Workers and traded down -3.35% post close. Mastercard (MA) beat their numbers but guided their Q4 lower and traded down -5.62% in the regular session. United Parcel Service (UPS) beat their earnings estimates on slightly weaker than expected revenues, guided their fiscal year lower and traded down -5.93% during the normal session.

Friday – Dow -366 to 32,417, Nasdaq +47 to 12,643, S&P -19 to 4,117, USD10Y +0.0bp to 4.845%.

Eight of eleven S&P sectors traded down, led lower by Energy, Financials, and Utilities.
September Headline Personal Consumption Expenditure (PCE) was unchanged from last month at +0.4%. Year-over-year PCE was also unchanged at +3.4%.
September Core PCE was up +0.3% vs +0.1% last month and the year-over-year number ticked down to +3.7% vs +3.8% last month.
Earnings: Exxon Mobile beat their revenue estimates despite that number being just 46% of what it was in Q3 last year; the earnings number they provided was unable to be compared to estimates. Chevron’s (CVX) revenues were half what they were in the same period last year and they missed their earnings estimates badly; CVX traded down -5%.

Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, and TSLA.