October 29 Market Recap
October 29 Market Recap – Earnings continue to be impressive with notable exceptions: Facebook (FB), Amazon (AMZN), and Apple (APPL). Next week earnings continue, the Fed announces their tapering schedule on Wednesday, and the October jobs report hits the tape on Friday.
Dow 35,819 +142 or 0.39%
Nasdaq 15,498 +601 or 4%
S&P 4,605 +61 or 1.3%
U.S. 10 Year Treasury Yield 1.564%, (7.9 bp) or (4.8%)
Great Earnings Numbers but Notable Exceptions
Earnings were the story of the week yet again. Multiple record closes were achieved, including closing record highs for all three indices on Friday. On their earnings calls, many companies cited rising input costs, supply chain issues and labor shortages yet most were able to pass those rising costs onto the consumer. Notable exceptions were Facebook (FB) which missed their revenue numbers and rebranded to Meta (ticker MVRS starting December 1), Apple (AAPL) who said supply chain issues cost them $6 billion in sales this quarter and Amazon (AMZN) which cited labor shortages resulting in longer and more expensive delivery routes. Almost half of the S&P 500 have reported earnings and more than 80% of them have beat their earnings estimates.
All eyes are on the Federal Reserve on Wednesday when Chairman Jerome Powell holds a press conference to announce the Fed’s long awaited tapering strategy. Experts believe that the purchases of $120 billion per month of US Treasuries will be paired back by $15 billion per month and the purchase program terminated by mid 2022. Earnings continue unabated with many names in the travel and hospitality industry reporting. The October Jobs Report is scheduled for Friday with Wells Fargo economists looking for an increase of 390,000 jobs vs last month’s disappointing 194,000 print.
Market Data Points Next Week
- Monday – October final Markit and ISM Manufacturing PMI.
- Tuesday –Earnings: Pfizer (PFE), Under Armour (UA), Caesars Entertainment (CZR), Zillow (ZG).
- Wednesday – ADP Employment Report, October final Markit and ISM Services PMI, September Durable Goods Orders. Fed Chair Jerome Powell Press Conference. Earnings: Qualcomm, CVS Health (CVS), Marriott (MAR), Etsy (ETSY), Electronic Arts (EA), Booking Holdings (BKNG), MGM Resorts (MGM), Hyatt Hotels (H).
- Thursday – Initial Jobless Claims, GDP. Earnings: Moderna (MRNA), Pinterest (PINS), Expedia (EXPE), Airbnb (ABNB), Uber (UBER), Square (SQ).
- Friday – October Jobs Report (Nonfarm Payrolls), Unemployment Rate.
October 29 Market Recap Trading…
Monday– Dow +64 to 35,741 (record close), Nasdaq +136 to 15,226, S&P +21 to 4,566 (record close).
- Nine of the eleven S&P sectors traded higher today with Consumer Discretionary, Energy and Materials leading the rally. Financials and Utilities were the worst performers.
- Facebook (FB) beat earnings estimates but missed their revenue number and guided Q4 lower but traded up 1.26% intraday and another 1.73% post-close.
- Tesla (TSLA) ripped higher (+12.66%), established a new high, and broke the $1 trillion valuation mark today on news that rental car giant Hertz placed a $4.4 billion order for 100,000 cars for its fleet.
- Nascent EV manufacturer Lucid Group (LCID) soared 11% after releasing a photo of their first sedans coming off their manufacturing line.
- PayPal (PYPL) popped 2.7% after announcing they would not be bidding for Pinterest (PINS). PINS traded down 12.7% on the news.
- The 10-year U.S. Treasury fell under 1 bp to settle at 1.637%.
Tuesday – Dow +15 to 35,756 (record close), Nasdaq +9 to 15,235, S&P +9 to 4,574 (record close).
- Earnings: Alphabet (GOOG) crushed their numbers. Microsoft (MSFT) beat expectations and traded up 2% after hours. Visa (V) beat numbers and increased their dividend 17% yet traded down due to what one analyst considered conservative revenue guidance going forward. Advanced Micro Devices (AMD) beat numbers and boosted guidance. Twitter (TWTR) did not get caught up in the same new APPL iPhone privacy issues as did SNAP or FB and posted better than expected numbers; the stock traded up 3.86% post-close. United Parcel Service (UPS) posted its best year ever and will raise prices next year; the stock gained 6.95% in the regular session.
- Nine of the eleven S&P sectors traded in the green today led by Energy, Utilities, and Healthcare.
- The 10-year U.S. Treasury yield traded down 2 bp to 1.616%.
- October Consumer Confidence beat expectations at 113.8 vs 108 expected and last month’s 109.8 print.
Wednesday – Dow (266) to 35,490, Nasdaq +0 to 15,235, S&P (23) to 4,536.
- September Durable Goods were better than expected, down 0.4% vs expected down 1%.
- Earnings: Coca-Cola (KO) traded up +1.93% during the regular session, beat their numbers handily and raised their annual guidance. McDonald’s (MCD) traded up 2.67% as they beat their numbers on higher menu prices and larger order sizes. Boeing (BA) traded down 1.53% as they missed their numbers. General Motors (GM) beat their numbers but traded down 5.42% due to semiconductor chip and vehicle inventory shortages. Ford (F) on the other hand, traded up 8.7% post-close, crushed their earnings, slightly beat on revenues and was more upbeat regarding the semiconductor situation. Norfolk-Southern (NSC) beat their numbers but traded flat on the day. eBay (EBAY) traded down 5.34% after reporting better than expected numbers but guided Q4 lower. KLA Corp (KLAC) traded up 3.65% after beating numbers and guiding higher. Harley-Davidson (HOG) slaughtered the Street’s estimates and traded up 3.55%.
- Only two of eleven S&P sectors traded higher today, led by Communication Services and Consumer Discretionary. The worst performers were Materials, Financials and Energy respectively.
- The 10-year U.S. Treasury yield fell 8 bp to 1.535%.
Thursday – Dow +239 to 35,730, Nasdaq +212 to 15,448, S&P +44 to 4,596 (record close).
- Initial Jobless Claims were 281,000 vs expectations of 290,000 and last week’s slightly revised higher print of 291,000.
- Q3 GDP came in at 2.0% vs expectations of 2.8%.
- All eleven S&P sectors traded positively today led by Real Estate, Consumer Discretionary and Industrials.
- Earnings: Apple (AAPL) said that supply chain issues cost the company $6 billion in sales this quarter, and while they met their earnings estimates, they missed their revenue target. The stock traded down3.5% post-close. Amazon (AMZN) missed numbers and guided down blaming supply chain issues and labor shortages. The stock traded 4% in the extended session. Caterpillar (CAT) beat on earnings but just missed on revenues and traded up 4% in the regular session. Comcast (CMCSA) beat all their metrics but still traded down 1%. Yum Brands (YUM) parent company of Pizza Hut, KFC, and Taco Bell beat numbers, but the stock traded relatively flat. Starbucks (SBUX) beat earnings but missed on revenues blaming a slowdown in their Chinese business. Anheuser-Busch InBev (BUD) traded up 9.4% after beating their numbers and raising their 2021 forecast.
- The 10-year U.S. Treasury yield rose 4 bp to 1.576%.
Friday – Dow +89 to 35,819 (record close), Nasdaq +50 to 15,498 (record close), S&P +9 to 4,605 (record close).
- All three indices closed at record highs despite poor breadth within the S&P sectors and despite two very bad earnings misses from Apple (AAPL) and Amazon (AMZN) last night.
- September Core Inflation was up 0.2%, in line with expectations and vs last month’s 0.3% increase. Year over year the core number was 3.6% unchanged from last month.
- September Personal Income fell faster than expected while Personal Spending was up slightly and in line with expectations.
- October Chicago PMI beat expectations: 68.4 vs 63.5.
- Only four of eleven S&P sectors traded positively today led by Healthcare, Communication Services and Tech.
- The 10-year U.S. Treasury yield fell less than 1 bp to 1.564%.
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