Stock Market News for October 20, 2014
Markets ended in the green on Friday, offsetting some of the weekly losses on upbeat earnings results and encouraging economic data. The Dow registered gains for the first time in six days. However, the S&P 500 witnessed its fourth straight weekly loss, the longest streak of weekly losses in three years.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
The Dow Jones Industrial Average (DJI.V) rose 1.6%, or 263.17 points, to close at 16,380.41. The Standard & Poor 500 (S&P 500) gained 1.3% to close at 1,886.76. The tech-laden Nasdaq Composite Index closed at 4,258.44; rising almost 1%. The fear-gauge CBOE Volatility Index (:VIX) declined 12.7% to settle at 21.99. A total of 1.97 billion shares were traded on NYSE on Friday. Advancers outpaced declining stocks on the NYSE. For 64% stocks that advanced, 34% declined.
Shares of General Electric Company (GE) gained 2.4% after posting third quarter operating earnings per share (EPS) of 38 cents, beating the Zacks Consensus Estimate by a cent. The EPS also rose 5.6% year-over-year.
Rebound in trading activity drove Morgan Stanley’s (MS) third-quarter 2014 adjusted earnings from continuing operations to 65 cents per share, which surpassed the Zacks Consensus Estimate of 54 cents. Results benefited from a drastic improvement in net interest income and higher fee income. Shares of Morgan Stanley rose 2.1% following its impressive third quarter results.
Textron Inc.’s (TXT) shares surged 8.9% after reporting third quarter earnings per share of 60 cents, exceeding the year-ago figure of 35 cents by 71.4%. The EPS also came ahead of the Zacks Consensus Estimate of 53 cents. The improved performance reflects higher contribution from most of its business segments. Textron also lifted its 2014 earnings per share from continuing operations guidance in the band of $2.05-$2.15 from the previous guidance of $1.92–$2.12. Textron was the biggest gainer among the S&P 500 companies.
Shares of Honeywell International Inc. (HON) jumped 4.3% after announcing third quarter adjusted earnings per share of $1.43, a couple of cents higher than the Zacks Consensus Estimate. Honeywell also revised its sales guidance for 2014 from a range of $40.2–$40.4 billion to $40.3–$40.4 billion.
Upbeat results from General Electric, Textron and Honeywell boosted the Industrial Select Sector SPDR ETF (XLI) to gain 2% on Friday. The sector was the biggest gainer among the S&P 500 sectors. Key industrial stocks including FedEx Corporation (FDX), The Boeing Company (BA), CSX Corp. (CSX) and Delta Air Lines, Inc. (DAL) rose 2.8%, 2.5%, 2.7% and 3.2%, respectively. All the S&P 500 sectors registered gains on Friday.
However, shares of Google Inc. (GOOGL) declined 2.6% after reporting third quarter earnings per share of $4.91, missing the Zacks Consensus Estimate of $5.34. Google reported the results after the closing bell on Thursday.
On the economic front, the U.S. Census Bureau reported that construction of privately-owned housing jumped 6.3% on September to seasonally adjusted annual rate of 1,017,000 from August. The figure also came ahead of the consensus estimate of 1,012,000 and was also 17.8% higher than the year-ago level. Additionally, building permits in September rose 1.5% from August to 1,018,000.
Separately, Thomson Reuters and University of Michigan consumer sentiment index rose in October to 86.4, reaching its highest level since Jul 2007. It was also higher than the consensus estimate of 84. However, economists speculated that the index can witness a downward revision due to the presence of Ebola fears.
Over the week, both the Dow and S&P 500 each declined 1% and the Nasdaq dropped 0.4%.
Through the week, benchmarks experienced volatile sessions as global growth worries and concerns over outbreak of Ebola virus dented investor sentiment. Moreover, declining oil prices also dragged down the markets. However, St. Louis Federal Reserve president James Bullard’s comments which sparked possibility of the Fed continuing with its bond repurchase plan boosted investors’ confidence.
Separately, concerns about Ebola outbreak was triggered by news that a nurse was affected with Ebola in the US while treating a Liberian man affected with the deadly virus. This news dragged down airline stocks on concerns that demand for travel-related services may be affected.
Moreover, economic data, including manufacturing activity in New York, PPI and U.S. homebuilders’ confidence was disappointing. However, data on initial claims, industrial production and demand for manufactured goods were positive.
However, most of the earnings results released last week were positive. Companies including The Goldman Sachs Group, Inc. (GS), Domino's Pizza, Inc. (DPZ), Philip Morris International, Inc. (PM), Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Wells Fargo & Company (WFC) posted upbeat quarterly earnings results. However, Bank of America Corporation (BAC) reported dismal third quarter results.
Read the analyst report on GE
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Read the analyst report on TXT
Read the analyst report on HON
Read the analyst report on GOOGL
Read the analyst report on GS
Read the analyst report on DPZ
Read the analyst report on C
Read the analyst report on JPM
Read the analyst report on WFC
Read the analyst report on PM
Read the analyst report on BAC
Read the analyst report on BA
Read the analyst report on CSX
Read the analyst report on DAL
Read the analyst report on FDX
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