On 27 October, 2016 – Stocks were mostly lower
Earnings and central bank policies continued to dominate investors’ decision making.
United States
US shares retreated Thursday as industrial companies like military contractor Raytheon were lower. The interest rate policy of the United States remains a dominant topic of conversation among traders. The Dow Jones industrials were down 0.2 percent, the S&P slipped 0.3 percent and Nasdaq retreated 0.7 percent.
Qualcomm said it would buy NXP Semiconductors for $110 a share in cash or $38 billion.
Qualcomm and NXP both gained. Raytheon declined after the company’s outlook did not impress investors. L-3 Communications declined after it posted weak sales. Boeing was lower after surging on Wednesday. Bristol-Myers Squibb reported a larger profit and greater sales than expected as sales of medicines including its cancer treatment Opdivo and the anti-clotting drug Eliquis continued to grow. The company raised its annual forecasts.
Tesla Motors advanced after it reported its first quarterly profit in three years. The company also said its revenue more than doubled and it did not expect it would need to raise cash in the next few quarters. Ford Motor said its quarterly profit fell by more than half as it grappled with a big recall and a tricky introduction of heavy-duty pickups. GNC Holdings tumbled after the company reported a smaller profit and weaker sales than investors anticipated. Twitter advanced after the company said the number of users rose 3 percent in its latest quarter. Twitter also said it would cut more than 300 jobs.
Amgen reported higher-than-expected third-quarter profit despite disappointing sales of some of its biggest medicines. Results were helped by lower research and manufacturing costs and onetime payments. The company raised its full-year earnings forecast. Amgen posted a net profit of $2.02 billion or $2.68 per share compared with a profit of $1.86 billion or $2.44 per share, a year ago.
Alphabet reported a 20.2 percent increase in quarterly revenue, helped by robust sales of advertising on mobile devices and YouTube. The company’s consolidated revenue rose to $22.45 billion in the three months to September 30 from $18.68 billion a year earlier. Net income rose to $5.06 billion or $7.25 per Class A and B share and Class C capital stock from $3.98 billion or $5.73 per share a year earlier.
Amazon.com reported a 29 percent rise in quarterly revenue boosted by a big jump in sales from its Prime Day annual shopping festival, strong back-to-school shopping and its cloud services business. Amazon said its net sales rose to $32.71 billion in third quarter ended September 30 from $25.36 billion a year earlier. Analysts had expected net sales of $32.69 billion. Net income rose to $252 million or 52 cents per share from $79 million or 17 cents per share a year earlier.
Initial jobless claims in the week ended October 22nd declined 3,000 to 258,000 from the previous week’s revised level of 261,000. September durable goods orders slipped 0.1 percent after rising by a revised 0.3 percent in August. Excluding orders for transportation equipment, durable goods orders rose by 0.2 percent after inching up by a revised 0.1 percent in August. The National Association of Realtors said its pending home sales index jumped by 1.5 percent to 110.0 in September after tumbling by 2.5 percent to a revised 108.4 in August. A pending home sale is one in which a contract has been signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$4.25 to US$1,266.25. Copper futures were up 0.8 percent to US$2.16. WTI spot crude was up 47 US cents to US$49.65. Dated Brent spot crude was up 42 US cents to US$50.40. The US dollar was up against the yen, pound, yuan and the Australian dollar. However, it declined against the Swiss franc. It was unchanged against the euro and Canadian dollar. The Dollar Index was up 0.3 percent. The yield on US Treasury 30 year bond was up 4 basis points to 2.60 percent while the yield on the 10 year note was up 5 basis points to 1.84 percent.
Europe
Stocks were mostly higher Thursday in choppy trading. Mixed earnings reports and some weak Chinese data overshadowed today’s strong UK gross domestic product report. The FTSE and SMI added 0.4 percent each while the DAX inched up 0.1 percent. The CAC was virtually unchanged (down 1.02 points).
BASF gained after reporting a fall in third-quarter profit. Deutsche Bank advanced after it swung to a surprise profit in the third quarter. Schneider Electric declined after reporting a drop in third-quarter revenue. Technip increased after it reported stronger than expected third quarter earnings. STMicroelectronics surged after it reported that third quarter net income declined to $71 million or $0.08 per share from last year’s $90 million or $0.10 per share. In London, Barclays climbed after it reported better than expected earnings. Nokia tumbled in Helsinki after the network equipment maker reported a loss in its third quarter on lower sales amid a downturn in the networks industry.
Barclays advanced after its third quarter results beat forecasts. The lender posted a rise in third quarter profits to £1.7 billion, helped by an improvement in its investment bank division. Lloyds continued to rebound after dropping following its own results on Wednesday. It initially fell as the government restarted its scheme to sell its stake in the bank. UBS reiterated a “buy” rating on the stock. Barratt Developments dropped after trading ex-dividend. Berendsen tumbled nearly on a profit warning.
UK gross domestic product was up 0.5 percent on the quarter and 2.3 percent from the same quarter a year ago. Robust services growth offset the contractions in other sectors. British retailers reported the strongest increase in sales volume in a year in October according to the latest Distributive Trades Survey from the Confederation of British Industry. About 40 percent of retailers expect sales volume to increase, while 19 percent said they declined, giving a balance of plus 21 percent compared to minus 8 percent in September.
Asia Pacific
Stocks were mostly lower Thursday thanks to skepticism over OPEC’s proposed deal to curb oil production. The yen recovered some ground against its major counterparts and a report showed profits earned by China’s industrial firms slowed in September, keeping investors nervous. Traders also looked ahead to a slew of US data including Friday’s third-quarter GDP report for fresh clues about when the Federal Reserve will increase the fed funds rate.
The Shanghai Composite slipped 0.1 percent while the Hang Seng lost 0.8 percent. The Shanghai Composite lost ground with a weaker yuan, liquidity concerns and slowing industrial profit growth. China’s industrial profits increased at a slower pace in September. Industrial profits grew only 7.7 percent on the year after expanding 19.5 percent in August. The increase in August was the fastest in three years.
The Nikkei was down 0.3 percent while the Topix was virtually unchanged (down 0.69 point). The US dollar weakened against the yen in late trading. Canon tumbled after lowering its full-year operating outlook. Nintendo gained despite cutting its annual profit outlook. Advantest gained after the company increased its operating profit forecast for the year ending March 2017.
Both the S&P/ASX and All Ordinaries lost 1.2 percent with energy companies and miners pacing the declines. Beach Energy, Oil Search, Origin Energy and Santos dropped as oil prices hit a three-week low. BHP Billiton and Fortescue Metals Group retreated. Gold miner Newcrest Mining was lower despite reporting higher gold output in the September quarter. National Australia Bank was up after it reported an increase in full-year cash profit and maintained its dividend.
The Kospi was up 0.5 percent while the Sensex was 0.3 percent higher.
Looking Forward
Japan posts September consumer price index, household spending and unemployment. Australia reports third quarter producer price index. France releases flash third quarter gross domestic product and September consumption of manufactured goods, consumer and producer price indices. Eurozone business and economic sentiment for October will be released. In the US, preliminary third quarter gross domestic product and employment cost index plus final consumer sentiment will be reported.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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