- Scott Peters
- 19 Oct, 2023
- New York City
Stocks rebounded in the afternoon and benchmark indexes scaled higher after investors reviewed rececnt comments from Federal Reserve Chairman Jerome Powell.
The S&P 500 index increased 0.1% to 4,318.15 and the Nasdaq Composite rose 0.2% to 13,332.71.
The yield on 2-year Treasury notes increased to 5.21%, 10-year Treasury notes inched higher to 4.94% and 30-year Treasury bonds edged up to 5.02%.
Tesla Inc decreased 7.5% to $224.30 after the electric vehicle maker reported a sharp decline in its quarterly profits and weaker margins.
Revenue in the third quarter increased 9% to $23.4 billion from $21.5 billion and net income attributable to shareholders plunged 44% to $1.9 billion from $3.3 billion and diluted earnings per share dropped to 53 cents from 95 cents a year ago.
Moreover, free cash flow plunged to $848 million from $3.3 billion as the company continued its investment in Artificial Intelligence based products, autonomous vehicles and its much delayed Cybertruck vehicle.
Netflix Inc soared 15% to $397.60 after the video streaming platform operator reported sharply higher revenue and earnings growth and added that the company is likely to exceed its annual free cash flow estimate.
Revenue in the third quarter increased 7.8% to $8.5 billion from $7.9 billion and net income surged to $1.7 billion from $1.4 billion and diluted earnings per share advanced to $3.73 from $3.10 a year ago.
Global streaming paid members increased by 8.76 million to 247.15 million, an increase of 10.8% from a year ago.
Free cash flow soared to $1.9 billion from $472 million a year earlier.
The streaming platform estimated revenue in the fourth quarter to jump 11% to $8.7 billion and paid net additions to match the increase in the third quarter.
Pool Corporation declined 2.3% to $329.03 after the pool supplies company reported mixed quarterly results.
Revenue in the third quarter declined 9% to $1.5 billion from $1.6 billion and net income fell 27% to $137.8 million from $190 million and diluted earnings per share fell to $3.51 from $4.78 a year ago.
The pool supplies wholesaler guided its annual earnings per share in the range between $13.15 and $13.65, compared to pre-pandemic $6.14 per share in 2019.
American Airlines Group Inc increased 2.8% to $11.67 after the company reported record quarterly revenue but swung to a loss.
Revenue in the third quarter edged up 0.1% to $13.5 billion and net income swung to a loss of $545 million from a profit of $483 million and diluted earnings per share was ($0.89) compared to 69 cents a year ago.
The airline is focused on lowering its debt from record high during the height of pandemic disruptions and using the rebound in cash flow to pay down its debt.
American reduced total debt by $1.4 billion in the third quarter and the company is more than 70% of the way to its goal of reducing total debt by $15 billion by the end of 2025.
As of Sept. 30, 2023, American had reduced its total debt by approximately $10.9 billion from peak levels in mid-2021.
The company estimated a fourth quarter adjusted operating margin between 2% and 4% and full-year 2023 margin of 7%.
Ally Financial Inc declined 1.2% to $25.31 after the automobile loans provider reported weaker-than-expected revenue growth.
Revenue in the third quarter declined 2% to $1.96 billion from $2.06 billion and net income dropped 1% to $269 million from $272 million and earnings per share was unchanged at 88 cents.
In the vehicle financing business, the core driver of the company's revenue, net interest margin declined 57 basis points from a year ago to 3.24% and loan loss provision increased by $70 million to $508 million from a year ago.
In the quarter, the company originated $10.6 billion of auto loans, including $6.9 billion of used retail volume, or 66% of total originations, $2.9 billion of new retail volume, and $0.7 billion of leases.
Estimated retail auto loans are estimated to yield 10.7% in the quarter, an increase of 193 basis points from a year ago.
In the quarter the company added 95,000 new retail bank customers, increasing the total to 3 million with a total deposit of $140 billion and 92% of balances are FDIC insured.
Las Vegas Sands Corp added 3.7% to $46.26 after the casino operator reported a rebound in revenue at its international locations.
Revenue in the third quarter soared to $2.7 billion from $1.0 billion and swung to a net income of $380 million from a loss of $239 million and diluted earnings per share rose to 50 cents from ($0.30).
The company increased its stock repurchase program to $2 billion and extended expiry to 2025 from the current $916 million and announced a quarterly dividend of 20 cents, matching the rate in the previous quarter.
- Barry Adams
- 19 Oct, 2023
- New York City
Market indexes on Wall Street lacked direction and the popular averages are likely to extend weekly losses after bond yields approached 16-year highs.
The S&P 500 index and the Nasdaq Composite index lacked directions and for the week are down 0.3% and 0.7% respectively as investors reviewed latest earnings results.
The yield on 10-year Treasury notes edged higher ahead of comments from the Federal Reserve Chairman Jerome Powell and investors are factoring another rate hike at the end of the next policy meeting ending on November 1.
Investors reacted positively after Netflix reported a surge in net paid subscribers in the third quarter and forecasted revenue growth to sustain in the fourth quarter.
Tesla faced headwinds after the electric vehicle maker reported a sharp drop in quarterly earnings and a decline in gross margin after the company offered larger-than-usual discounts.
On the economic front, the initial jobless claims declined 14,000 to 198,000 for the week ending on October 14, the U.S. Department of Labor reported Thursday.
The weekly jobless claims dropped to the lowest level since January, confirming the tight labor market conditions.
U.S. Indexes & Yields
The S&P 500 index increased 0.1% to 4,318.15 and the Nasdaq Composite rose 0.2% to 13,332.71.
The yield on 2-year Treasury notes increased to 5.21%, 10-year Treasury notes inched higher to 4.94% and 30-year Treasury bonds edged up to 5.02%.
Crude oil decreased $0.89 to $87.46 a barrel and natural gas prices fell 2 cents to $3.07 a thermal unit.
The dollar index edged higher to 106.29, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.
U.S. Stock Movers
Tesla Inc decreased 7.5% to $224.30 after the electric vehicle maker reported a sharp decline in its quarterly profits and weaker margins.
Revenue in the third quarter increased 9% to $23.4 billion from $21.5 billion and net income attributable to shareholders plunged 44% to $1.9 billion from $3.3 billion and diluted earnings per share dropped to 53 cents from 95 cents a year ago.
Moreover, free cash flow plunged to $848 million from $3.3 billion as the company continued its investment in Artificial Intelligence based products, autonomous vehicles and its much delayed Cybertruck vehicle.
Netflix Inc soared 15% to $397.60 after the video streaming platform operator reported sharply higher revenue and earnings growth and added that the company is likely to exceed its annual free cash flow estimate.
Revenue in the third quarter increased 7.8% to $8.5 billion from $7.9 billion and net income surged to $1.7 billion from $1.4 billion and diluted earnings per share advanced to $3.73 from $3.10 a year ago.
Global streaming paid members increased by 8.76 million to 247.15 million, an increase of 10.8% from a year ago.
Free cash flow soared to $1.9 billion from $472 million a year earlier.
The streaming platform estimated revenue in the fourth quarter to jump 11% to $8.7 billion and paid net additions to match the increase in the third quarter.
- Inga Muller
- 19 Oct, 2023
- Frankfurt
Benchmark indexes in Europe extended weekly losses and bond yields advanced to 12-year highs and the euro and the pound hovered near 6-month low.
The DAX index decreased 0.1% to 15,077.35, the CAC-40 index fell 0.5% to 6,929.24 and the FTSE 100 index fell 0.8% to 7,523.90.
The yield on 10-year German bonds increased to 2.93%, French bonds traded higher to 3.55%, the UK gilts edged up to 4.70% and Italian bonds eased to 4.99%.
Nestle SA decreased 2.2% to CHF 99.89 after the Swiss food company's nine-month sales growth disappointed investors.
Nokia Oyj dropped 6.0% to €3.07 after the company reported weaker-than-expected third quarter results and the company added it plans to trim its workforce.
The company said third quarter revenue declined 20% to 4.98 billion and net income plunged 69% to 133 million.
The company said it plans to eliminate as many as 14,000 jobs from the current 86,000 workforce base.
The latest job cut announcement follows the rival Ericsson's plan to cut 8,600 jobs after the U.S.-based carriers AT&T, T-Mobile and Verizon are slowing or cutting their infrastructure spending.
Hargreaves Lansdown PLC fell 4.5% to 704.50 pence after the retail financial services provider said client acquisition growth declined in the fiscal first quarter.
McBride Plc soared 19.5% to 38.86 pence after the U.K.-based household products maker said market momentum of the second-half fiscal 2023 continued in the fiscal 2024 first quarter.
Merck KGaA jumped 2.4% to €149.0 after the German pharmaceutical company forecasted sales growth to return in the fiscal 024 and the growth is expected to continue beyond 2025.
Sartorius AG decreased 1.2%to €208.0 after the German biotech company reported results for the first nine months of the year.
Pernod Ricard SA jumped 4% to €164.90 after the French wine and spirits maker forecasted higher sales in the fiscal 2024.
Renault SA dropped 6.7% to €33.74 after the French automaker said currency weakness in Turkey and Argentina weighed heavily on its sales growth in the third quarter.
- Bridgette Randall
- 19 Oct, 2023
- Frankfurt
Market indexes in Europe extended weekly losses after weak corporate results and rising bond yields compounded market anxieties.
The yields on government bonds advanced after the yield on 10-year U.S. Treasury notes approached 16-year high of 5%.
The yields on German bonds, French bonds and Italian bonds inched forward and hovered near the levels last seen in 2011.
Moreover, rising tensions in the Middle East also added to market jitters on the worries that Israel's aggressive response to Hamas-led attack and kidnappings may widen the conflict in the Middle East.
Widespread protests in Turkey, Iran, Iraq, Lebanon, Egypt and Malaysia and in Washington D.C and London called for immediate ceasefire and also put additional pressures on diplomats seeking a peaceful solution.
Palestinians feared that Israel's call for evacuation in north Gaza will be followed by a ground invasion and then confiscation of their land, the root cause of the seven-decade long conflict.
On the earnings front, weak results from Nokia, Nestle, Renault also weighed on the market sentiment.
Euro Area Current Account Surplus Expanded
The Euro Area current account surplus expanded in August after trade surplus rose, the European Central Bank reported Thursday.
The current account surplus increased to €28 billion from €21 billion in the previous month.
International goods trade surplus in the month rose to €35 billion from €25 billion but the service surplus narrowed to €6 billion from €10 billion in the previous month.
In the twelve months to August, the current account surplus rose to €126 billion, or 0.9% of the euro area GDP, from €12 billion surplus or 0.1% of GDP a year ago.
Europe Indexes & Yields
The DAX index decreased 0.1% to 15,077.35, the CAC-40 index fell 0.5% to 6,929.24 and the FTSE 100 index fell 0.8% to 7,523.90.
The yield on 10-year German bonds increased to 2.93%, French bonds traded higher to 3.55%, the UK gilts edged up to 4.70% and Italian bonds eased to 4.99%.
The euro hovered near a three-month low to $1.055, the British pound to $1.212 and the U.S. dollar fetched 89.72 Swiss cents.
Brent crude increased $1.22 to $90.29 a barrel and the Dutch TTF natural gas edged higher by €3.84 to €46.99 per MWh.
Europe Stock Movers
Nestle SA decreased 2.2% to CHF 99.89 after the Swiss food company's nine-month sales growth disappointed investors.
Nokia Oyj dropped 6.0% to €3.07 after the company reported weaker-than-expected third quarter results and the company also said it plans to trim its workforce.
Hargreaves Lansdown PLC fell 4.5% to 704.50 pence after the retail financial services provider said client acquisition growth declined in the fiscal first quarter.
McBride Plc soared 19.5% to 38.86 pence after the U.K.-based household products maker said market momentum of the second-half fiscal 2023 continued in the fiscal 2024 first quarter.
Merck KGaA jumped 2.4% to €149.0 after the German pharmaceutical company forecasted sales growth to return in the fiscal 024 and the growth is expected to continue beyond 2025.
Sartorius AG decreased 1.2%to €208.0 after the German biotech company reported results for the first nine months of the year.
Pernod Ricard SA jumped 4% to €164.90 after the French wine and spirits maker forecasted higher sales in the fiscal 2024.
Renault SA dropped 6.7% to €33.74 after the French automaker said currency weakness in Turkey and Argentina weighed heavily on its sales growth in the third quarter.
- Barry Adams
- 18 Oct, 2023
- New York City
After two hours of trading on Wall Street, benchmark indexes accelerated their declines and Treasury yields rebounded to 2007 highs.
Market mood soured after investors pored over details of the latest earnings reports and the rebound in bond yields put additional pressure on stocks.
Investors welcomed positive earnings from Procter & Gamble, United Airlines, JB Hunt and Morgan Stanley but cautious outlook turned several stocks volatile.
U.S. Treasury yields resumed their advances and the yield on 10-year U.S. Treasury notes inched higher to 4.8%, nearing the 2007-high.
Worries of another rate hike at the next meeting of policymakers and higher rates through 2024 dominated market sentiment for the second day in a row after retail sales advanced more-than-expected.
Moreover, the latest housing data confirmed that the U.S. economy is strong enough to withstand additional rate hikes, if policymakers decide to lift rates to bring down inflation to the target rate of 2%.
Despite several rate hikes over the last sixteen months, labor market conditions are still tight and inflation is still well above the Fed's target rate of 2%, and the latest rebound in crude oil prices added to market jitters.
Mortgage Applications Dropped to 28-year Low
Elevated interest rates continued to dampen demand for mortgage rates and applications for mortgages declined 6.9% from the previous week in the week ending on October 13.
The data from Mortgage Bankers Association showed that the demand for housing loans fell to the lowest level since 1995 and applications for home loan refinancing plunged 9.9%.
“Applications decreased to their lowest level since 1995, as the 30-year fixed mortgage rate increased for the sixth consecutive week to 7.70% – the highest level since November 2000,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
Housing Starts and Permits Fell and Completions Rose In September
Housing starts and permits fell in September but completions rose from a year ago, according to the latest data released by the U.S. Census Bureau and the Department of Housing and Urban Development.
Building permits declined 4.2% from the previous month and dropped 7.2% from a year ago to a seasonally adjusted rate of 1.47 million.
Housing starts rose 7.0% from the previous month but fell 7.2% from a year ago to a seasonally adjusted rate of 1.358 million.
Housing completions rose 6.6% from the previous month and edged up 1.0% from a year to a seasonally adjusted rate of 1.453 million.
Volatile Crude Oil
Crude oil prices surged more than 2% as traders feared supply disruptions and Israel military's ground invasion in Gaza.
Diplomats in the region worry that Israel's reaction to Hamas' kidnapping and attacks may be perceived as aggressive by the militants in Lebanon, Iran and Egypt.
On Monday, an Israeli bombing campaign killed at least 500 people at a hospital in Gaza City, prompting worries of more retaliatory attacks from Hamas led militants.
Israel denied the attack and said that the explosion was linked to the mishandled rocket launch by Hamas-controlled operators.
Positive China Economic Data Surprised Markets
In Asia, China's economy expanded at 4.9% annual pace in the third quarter, slower than the 6.2% increase in the second quarter, National Bureau of Statistics reported Tuesday.
Economists were looking for the second quarter growth of 4.5%, and faster-than-expected growth raised hopes that the second largest economy may achieve the government' annual growth target rate of 5.0%.
China's retail sales rose at the fastest pace in four months in September by 5.5% after rising at 4.6% in the previous month, the statistical agency said in a separate report.
U.S. Indexes & Yields
The S&P 500 index decreased 0.2% to 4,364.92 and the Nasdaq Composite fell 0.4% to 13,515.26.
The yield on 2-year Treasury notes decreased to 5.20%, 10-year Treasury notes inched higher to 4.88% and 30-year Treasury bonds edged up to 4.97%.
Crude oil increased $1.25 to $87.86 a barrel and natural gas prices rose 7 cents to $3.15 a thermal unit.
The dollar index edged higher to 106.48, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.
U.S. Stock Movers
United Airlines Holdings Inc dropped 5.1% to $37.65 after the international airline forecasted weak performance in the current quarter largely because of expensive fuel.
Revenue in the third quarter rose to $14.5 billion from $12.9 billion and net income advanced 20% to $1.1 billion.
Morgan Stanley decreased 4.6% to $77.60 despite the financial services provider reporting higher-than-expected quarterly sales and earnings but revenue in wealth management unit disappointed investors.
Procter & Gamble Co increased 1.2% to $148.0 after the consumer goods maker reported quarterly earnings that surpassed estimates set by some analysts.
Revenue in the latest quarter was $21.9 billion and diluted earnings per share $1.83.
J B Hunt Transport Services Inc declined 3.6% to $188.80 after the logistics and transportation services provider reported quarterly earnings that fell short of market expectations.
Interactive Brokers Group, Inc dropped 4.5% to $82.51 after the online institutional brokerage service provider reported adjusted earnings and revenues that fell below market's expectations.
European Markets Trended Lower Amid Worries of Widening Conflict In Middle East
European markets trended lower in range bound trading and investors stayed focused on earnings releases.
In cautious trading, investors worried that the latest flare up between Israel and Hamas may widen to Iran, Lebanon, Turkey and Egypt and even draw neighboring oil producing nations.
Crude oil prices surged more than 2% as traders feared supply disruptions and Israel military's ground invasion in Gaza.
Closer to home on the economic front, the Eurozone annual inflation in September was 4.3%, weaker than 5.2% in August, Eurostat confirmed in its second estimate.
UK Inflation Held Steady In September
The U.K. inflation in September held steady at 6.7% after weaker food price inflation was overshadowed by a rebound in transportation costs.
The consumer price inflation held at18-month low after food prices rose at 12.1% compared to 13.7% in August and energy costs declined 0.2% compared to 3.2% fall in the previous month.
Core inflation, which excludes volatile food and energy prices, eased to 6.1% and fell to the lowest level since January.
Europe Indexes & Yields
The DAX index decreased 1.0% to 15,094.91, the CAC-40 index fell 0.9% to 6,965.97 and the FTSE 100 index fell 1.0% to 7,588.0.
The yield on 10-year German bonds increased to 2.87%, French bonds traded higher to 3.50%, the UK gilts edged down to 4.55% and Italian bonds eased to 4.91%.
The euro hovered near a three-month low to $1.055, the British pound to $1.217 and the U.S. dollar fetched 89.92 Swiss cents.
Brent crude increased $1.31 to $91.21 a barrel and the Dutch TTF natural gas edged higher by €1.04 to €49.94 per MWh.
Europe Stock Movers
Adidas AG increased 3.8% to €177.50 after the athletic shoemaker lifted its annual revenue outlook.
Just Eat Takeaway.com advanced 1.1% to €12.05 after the company raised its full-year adjusted operating earnings outlook.
ABB Ltd declined 6.1% to CHF 30.68 after the Swiss engineering company forecasted slower revenue growth in the fourth quarter.
TotalEnergies SE increased 0.9% to €63.76 and BP Plc advanced 0.7% to 559.10 pence after Brent crude oil prices soared 2% in London following the worries of a wider conflict in the Middle East.
China-linked luxury stocks in Paris advanced after China reported faster-than-expected economic growth in the third quarter and industrial output and retail sales were ahead of market's expectations.
LVMH edged up 0.02% to €668.50, Kering SA edged up 0.2% to €671.50 and Richemont SA was unchanged at €74.18.
Barratt Developments PLC dropped 3% to 410.94 pence after the UK-based home builder said new home bookings are likely to ease 10% in the fiscal first quarter.
Marshalls PLC jumped 4.6% to 207.20 pence after the concrete products maker reiterated its full-year outlook.
- Scott Peters
- 18 Oct, 2023
- New York City
Benchmark indexes were under pressure after Treasury yields resumed their advance and earnings season gathered momentum.
The S&P 500 index decreased 0.2% to 4,364.92 and the Nasdaq Composite fell 0.4% to 13,515.26.
The yield on 2-year Treasury notes decreased to 5.20%, 10-year Treasury notes inched higher to 4.88% and 30-year Treasury bonds edged up to 4.97%.
Crude oil increased $1.25 to $87.86 a barrel and natural gas prices rose 7 cents to $3.15 a thermal unit.
United Airlines Holdings Inc dropped 5.1% to $37.65 after the international airline forecasted weak performance in the current quarter largely because of expensive fuel.
Revenue in the Atlantic region was up 15% from a year ago, and 70% compared to the quarter in 2019. Pacific revenue exceeded third-quarter 2019 levels despite capacity remaining 24% below third-quarter 2019, said the company in an update to investors.
The company also added profits in the Atlantic and Pacific regions were at record highs and domestic profits were the second-highest
Revenue in the third quarter rose 12.5% to $14.5 billion from $12.9 billion and net income advanced 20% to $1.1 billion from $942 million and diluted earnings per share rose to $3.42 from $2.86 a year ago.
Morgan Stanley decreased 4.6% to $77.60 despite the financial services provider reporting higher-than-expected quarterly sales and earnings but revenue in wealth management unit disappointed investors.
Revenue in the third quarter increased to $13.2 billion from $12.98 billion and net income rose to $2.40 billion from $2.63 billion and diluted earnings per share dropped to $1.38 from $1.47 a year ago.
Net revenue in the wealth management unit rose to $6.4 billion from $6..1 billion but net new assets inflow dropped to $35.7 billion from $64.7 billion a year ago.
The company repurchased 17 million of its own shares at an average price of $87.59 or $1.5 billion and the board of directors declared 85 cents a share dividend payable on November 15 to shareholders on record on October 31.
Procter & Gamble Co increased 1.2% to $148.0 after the consumer goods maker reported the fiscal first quarter 2024 earnings that surpassed estimates set by some analysts.
Revenue in the latest quarter increased 6% to $21.9 billion from $20.6 billion and and net income rose 15% to $4.5 billion from $3.9 billion and diluted earnings per share advanced to $1.83 from $1.57 a year ago.
Sales in the quarter were driven by 1% decline in volume and 7% increase in prices.
P&G guided sales in the fiscal 2024 to increase between 2% and 4% and diluted earnings per share to rise between 6% and 9% and fall between $6.25 and $6.43.
J B Hunt Transport Services Inc declined 3.6% to $188.80 after the logistics and transportation services provider reported quarterly earnings that fell short of market expectations.
Revenue in the third quarter declined 18% to $3.16 billion from $3.83 billion and net income fell to $187.4 million from $269.4 million and diluted earnings per share dropped to $1.80 from $2.57 a year ago.
Current quarter total operating revenue, excluding fuel surcharge revenue, decreased 15% from the comparable quarter 2022.
This decrease was primarily driven by a 14% and 22% decrease in Intermodal and truckload revenue per load (excluding fuel surcharge revenue) respectively, a 38% decrease in volume in Integrated Capacity Solutions, a 20% decrease in final mile services, and a 1% decline in average revenue producing trucks in dedicated contract services, partially offset by a 1% increase in intermodal volumes and a 6% increase in truckload loads compared to a year ago.
Interactive Brokers Group, Inc dropped 4.5% to $82.51 after the online institutional brokerage service provider reported adjusted earnings and revenues that fell below market's expectations.
Revenue in the third quarter increased to $1.2 billion from $790 million and net income rose to $167 million from $99 million and diluted earnings per share advanced to $1.56 from 97 cents a year ago.
Net interest income increased 55% to $733 million, reflecting higher benchmark interest rates and customer credit balances.
Commission revenue rose 4% to $333 million, driven by 18% increase in options contract volume while futures contract and stock trading volumes down 1% and 22% respectively.
- Barry Adams
- 18 Oct, 2023
- New York City
Stocks on Wall Street struggled and investors reviewed the latest batch of earnings.
Investors welcomed positive earnings from Procter & Gamble, United Airlines, Morgan Stanley but cautious outlook also turned several stocks volatile.
But bond yields resumed their advances and the yield on 10-year U.S. Treasury notes inched higher to 4.8%, nearing the 2007-high.
Mortgage Applications Dropped to 28-year Low
Elevated interest rates continued to dampen demand for mortgage rates and applications for mortgages declined 6.9% from the previous week in the week ending on October 13.
The data from Mortgage Bankers Association showed that the demand for housing loans fell to the lowest level since 1995 and applications for home loan refinancing plunged 9.9%.
“Applications decreased to their lowest level since 1995, as the 30-year fixed mortgage rate increased for the sixth consecutive week to 7.70% – the highest level since November 2000,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
Housing Starts and Permits Fell and Completions Rose In September
Housing starts and permits fell in September but completions rose from a year ago, according to the latest data released by the U.S. Census Bureau and the Department of Housing and Urban Development.
Building permits declined 4.2% from the previous month and dropped 7.2% from a year ago to a seasonally adjusted rate of 1.47 million.
Housing starts rose 7.0% from the previous month but fell 7.2% from a year ago to a seasonally adjusted rate of 1.358 million.
Housing completions rose 6.6% from the previous month and edged up 1.0% from a year to a seasonally adjusted rate of 1.453 million.
Volatile Crude Oil
Crude oil prices surged more than 2% as traders feared supply disruptions and Israel military's ground invasion in Gaza.
Diplomats in the region worry that Israel's reaction to Hamas' kidnapping and attacks may be perceived as aggressive by the militants in Lebanon, Iran and Egypt.
On Monday, an Israeli bombing campaign killed at least 500 people at a hospital in Gaza City, prompting worries of more retaliatory attacks from Hamas led militants.
Israel denied the attack and said that the explosion was linked to the mishandled rocket launch by Hamas-controlled operators.
Positive China Economic Data Surprised Markets
In Asia, China's economy expanded at 4.9% annual pace in the third quarter, slower than the 6.2% increase in the second quarter, National Bureau of Statistics reported Tuesday.
Economists were looking for the second quarter growth of 4.5%, and faster-than-expected growth raised hopes that the second largest economy may achieve the government' annual growth target rate of 5.0%.
China's retail sales rose at the fastest pace in four months in September by 5.5% after rising at 4.6% in the previous month, the statistical agency said in a separate report.
U.S. Indexes & Yields
The S&P 500 index decreased 0.2% to 4,364.92 and the Nasdaq Composite fell 0.4% to 13,515.26.
The yield on 2-year Treasury notes decreased to 5.20%, 10-year Treasury notes inched higher to 4.88% and 30-year Treasury bonds edged up to 4.97%.
Crude oil increased $1.25 to $87.86 a barrel and natural gas prices rose 7 cents to $3.15 a thermal unit.
The dollar index edged higher to 106.48, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.
U.S. Stock Movers
United Airlines Holdings Inc dropped 5.1% to $37.65 after the international airline forecasted weak performance in the current quarter largely because of expensive fuel.
Revenue in the third quarter rose to $14.5 billion from $12.9 billion and net income advanced 20% to $1.1 billion.
Morgan Stanley decreased 4.6% to $77.60 despite the financial services provider reporting higher-than-expected quarterly sales and earnings but revenue in wealth management unit disappointed investors.
Procter & Gamble Co increased 1.2% to $148.0 after the consumer goods maker reported quarterly earnings that surpassed estimates set by some analysts.
Revenue in the latest quarter was $21.9 billion and diluted earnings per share $1.83.
J B Hunt Transport Services Inc declined 3.6% to $188.80 after the logistics and transportation services provider reported quarterly earnings that fell short of market expectations.
Interactive Brokers Group, Inc dropped 4.5% to $82.51 after the online institutional brokerage service provider reported adjusted earnings and revenues that fell below market's expectations.
- Inga Muller
- 18 Oct, 2023
- Frankfurt
European markets declined on interest rate uncertainties, looming economic slowdown and the rising prospects of a wider conflict in the Middle East.
The DAX index decreased 0.6% to 15,158.37, the CAC-40 index fell 0.6% to 6,987.70 and the FTSE 100 index fell 0.7% to 7,621.56.
The yield on 10-year German bonds increased to 2.87%, French bonds traded higher to 3.50%, the UK gilts edged down to 4.55% and Italian bonds eased to 4.91%.
Adidas AG increased 3.8% to €177.50 after the athletic shoemaker lifted its annual revenue growth outlook.
Revenue in the third quarter declined 6.4% to €5.99 billion from €6.4 billion and gross margin improved to 49.3% from 49.1% a year ago.
Operating income fell to €409 million from €564 million from a year ago.
The sportswear maker forecasted its annual currency-neutral revenue to decline at a low-single-digit rate compared to the previous estimate of a decline in mid-single-digit.
The company also estimated operating profit from continuing operations to increase to €100 million from the previous estimate of a breakeven.
Just Eat Takeaway.com advanced 1.1% to €12.05 after the company raised its full-year adjusted operating earnings outlook.
ABB Ltd declined 6.1% to CHF 30.68 after the Swiss engineering company forecasted slower revenue growth in the fourth quarter.
TotalEnergies SE increased 0.9% to €63.76 and BP Plc advanced 0.7% to 559.10 pence after Brent crude oil prices soared 2% in London following the worries of a wider conflict in the Middle East.
China-linked luxury stocks in Paris advanced after China reported faster-than-expected economic growth in the third quarter and industrial output and retail sales were ahead of market's expectations.
LVMH edged up 0.02% to €668.50, Kering SA edged up 0.2% to €671.50 and Richemont SA was unchanged at €74.18.
Barratt Developments PLC dropped 3% to 410.94 pence after the UK-based home builder said new home bookings are likely to ease 10% in the fiscal first quarter.
Marshalls PLC jumped 4.6% to 207.20 pence after the concrete products maker reiterated its full-year outlook.
- Bridgette Randall
- 18 Oct, 2023
- Frankfurt
European markets trended lower in range bound trading and investors stayed focused on earnings releases.
In cautious trading, investors worried that the latest flare up between Israel and Hamas may widen to Lebanon, Turkey and Egypt and even draw neighboring oil producing nations.
Crude oil prices surged more than 2% as traders feared supply disruptions and Israel military's ground invasion in Gaza.
Diplomats in the region worry that Israel's reaction to Hamas' kidnapping and attacks may be perceived as aggressive by the militants in Lebanon, Iran and Egypt.
On Monday, an Israeli bombing campaign killed at least 500 people at a hospital in Gaza City, prompting worries of more retaliatory attacks from Hamas led militants.
Israel denied the attack and said that the explosion was linked to the mishandled rocket launch by Hamas-controlled operators.
In Asia, China's economy expanded at 4.9% annual pace in the third quarter, slower than the 6.2% increase in the second quarter, National Bureau of Statistics reported Tuesday.
Economists were looking for the second quarter growth of 4.5%, and faster-than-expected growth raised hopes that the second largest economy may achieve the government' annual growth target rate of 5.0%.
China's retail sales rose at the fastest pace in four months in September by 5.5% after rising at 4.6% in the previous month, the statistical agency said in a separate report.
Investors reacted negatively to the rise in retail sales in the U.S. indicating that the U.S. economy is strong enough to withstand higher interest rates.
U.S. retail sales jumped 0.7% in September from the previous month, indicating resilient consumer spending and supported the case for policymakers' to continue rate hikes and keep higher rates through 2024.
Closer to home on the economic front, the Eurozone annual inflation in September was 4.3%, weaker than 5.2% in August, Eurostat confirmed in its second estimate.
UK Inflation Held Steady In September
The U.K. inflation in September held steady at 6.7% after weaker food price inflation was overshadowed by a rebound in transportation costs.
The consumer price inflation held at18-month low after food prices rose at 12.1% compared to 13.7% in August and energy costs declined 0.2% compared to 3.2% fall in the previous month.
Core inflation, which excludes volatile food and energy prices, eased to 6.1% and fell to the lowest level since January.
Europe Indexes & Yields
The DAX index decreased 0.6% to 15,158.37, the CAC-40 index fell 0.6% to 6,987.70 and the FTSE 100 index fell 0.7% to 7,621.56.
The yield on 10-year German bonds increased to 2.87%, French bonds traded higher to 3.50%, the UK gilts edged down to 4.55% and Italian bonds eased to 4.91%.
The euro hovered near a three-month low to $1.055, the British pound to $1.217 and the U.S. dollar fetched 89.92 Swiss cents.
Brent crude increased $2.53 to $92.47 a barrel and the Dutch TTF natural gas edged higher by €1.67 to €50.57 per MWh.
Europe Stock Movers
Adidas AG increased 3.8% to €177.50 after the athletic shoemaker lifted its annual revenue outlook.
Just Eat Takeaway.com advanced 1.1% to €12.05 after the company raised its full-year adjusted operating earnings outlook.
ABB Ltd declined 6.1% to CHF 30.68 after the Swiss engineering company forecasted slower revenue growth in the fourth quarter.
TotalEnergies SE increased 0.9% to €63.76 and BP Plc advanced 0.7% to 559.10 pence after Brent crude oil prices soared 2% in London following the worries of a wider conflict in the Middle East.
China-linked luxury stocks in Paris advanced after China reported faster-than-expected economic growth in the third quarter and industrial output and retail sales were ahead of market's expectations.
LVMH edged up 0.02% to €668.50, Kering SA edged up 0.2% to €671.50 and Richemont SA was unchanged at €74.18.
Barratt Developments PLC dropped 3% to 410.94 pence after the UK-based home builder said new home bookings are likely to ease 10% in the fiscal first quarter.
Marshalls PLC jumped 4.6% to 207.20 pence after the concrete products maker reiterated its full-year outlook.
- Barry Adams
- 17 Oct, 2023
- New York City
Stocks on Wall Street lacked direction as traders reviewed corporate earnings and Treasury yields rebounded to 2007-highs.
Investors struggled to be optimist after positive earnings from big banks last week and better-than-expected earnings from Bank of America, Goldman Sachs, Lockheed Martin.
Market sentiment was also bolstered after Choice Hotels launched a public offer to buy Wyndham Hotels after merger talks broker down following six months of discussions and two raised bids.
But it was the hotter-than-expected retail sales that put market on the defensive.
The yield on 10-year U.S. Treasury notes rose to 4.8%, the high reached in 2007, indicated that the bond market is factoring another rate hike by the Federal Reserve before the end of 2023.
The yield on 30-year Treasury note inched higher to 4.95% and 2-year note jumped to 5.2%.
Resilient Consumer Spending Lifts Retail Sales In September
Retail and food services sales unadjusted for inflation rose 0.7% from the previous month and advanced 3.8% from the previous year in September from an upwardly revised 0.8% increase in August.
The retail and food services sales are adjusted for seasonal and calendar changes but not adjusted for price changes or inflation.
Retail trade sales were up 0.7% from August, and up 3.0% above last year and nonstore retail sales were up 8.4% and food services and drinking places sales were up 9.2% from a year ago respectively.
Seasonally adjusted sales rose for the sixth month in a row on a monthly basis and advanced at the fastest pace in seven months when measured on an annual basis.
The hotter-than-expected retail sales data lifted 10-year U.S. Treasury yield to 4.80% and the yield hovered near 16-year high.
Benchmark indexes traded down after the release of retail sales figures supported the case for one more rate hike in 2023 and higher rates through 2024.
U.S. Indexes & Yields
The S&P 500 index decreased 0.2% to 4,364.92 and the Nasdaq Composite fell 0.4% to 13,515.26.
The yield on 2-year Treasury notes increased to 5.22%, 10-year Treasury notes inched higher to 4.80% and 30-year Treasury bonds edged up to 4.95%.
Crude oil increased $0.33 to $87.02 a barrel and natural gas prices eased 1 cent to $3.09 a thermal unit.
The dollar index edged higher to 106.48, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.
U.S. Stock Movers
Bank of America Corp increased 1.3% to $27.33 after the financial services company reported quarterly results.
Revenue in the third quarter increased 3% to $25.2 billion from $24.5 billion and net interest income jumped 4% to $14.4 billion driven by higher interest rates and loan growth.
Net income in the quarter increased to $7.8 billion from $7.4 billion and diluted earnings per share edged up to 90 cents from 88 cents a year ago.
The provision for loan losses edged up by $336 million to $1.2 billion, reflecting weakening commercial real estate market conditions and stretched consumers.
Goldman Sachs was unchanged at $314.50 after the financial services provider reported mixed quarterly results.
Third quarter revenue edged slightly lower to $11.8 billion from $11.97 billion and net income dropped to $2.1 billion from $3.1 billion and diluted earnings per share fell to $5.47 from $8.25 a year ago..
The 6% decline in revenue in asset management was overshadowed by an 8% increase in global investment banking fees.
Johnson & Johnson added 0.1% to $157.57 after the company reported slightly better-than-expected quarterly results.
Revenue in the third quarter increased 6.8% to $21.3 billion from $19.99 billion and net earnings was flat at $4.3 billion and diluted earnings per share edged up 4% to $1.69 from $1.62 a year ago.
Sales in the U.S. increased 11.1% to $12 billion from $10.8 billion and international sales rose 1.6% to $9.3 billion from $9.2 billion a year ago.
The company revised higher its estimate of non-GAAP annual sales growth estimate to between 8.5% and 9.0% from the previous estimate between 8.0% and 8.5%.
European Markets Erased Day's Losses
European markets traded in a tight range with a downward bias amid heightened geopolitical tensions in the Middle East.
Market sentiment in Paris, London and Frankfurt was mixed as earnings season picked up pace and investors reviewed the latest economic signals from the UK and Germany.
Germany's ZEW economic sentiment index improved to -1.1 in October from -11.4 in September, marking the highest reading since April, the Center for Economic Research reported Monday.
The private survey indicated that over three quarters of participants expected a steady improvement in inflation and estimated short term interest rates have stabilized in the Euro Area.
Separately, the average earnings growth in three months to August in the UK eased slightly, but the increase was still one of the largest gains since record keeping began in 2001.
Average weekly earnings, including bonuses rose 8.1% from a year ago to £661 and excluding bonuses gained 7.8% from a year ago £619, the Office for National Statistics reported Monday.
The weekly earnings from a year ago rose 12.7% in the public sector and increased 7.1% in the private sector, following the one-time payments to civil servants and NHS in June, July and August.
Annual growth in real terms, adjusted for inflation. rose 1.3% for total wages including bonuses and inched up 1.1% excluding bonuses.
Europe Indexes & Yields
The DAX index increased 0.09% to 15,251.69, the CAC-40 index edged up 0.1% to 7,029.70 and the FTSE 100 index added 0.6% to 7,675.21.
The yield on 10-year German bonds increased to 2.80%, French bonds traded higher to 3.43%, the UK gilts edged down to 4.48% and Italian bonds eased to 4.81%.
The euro hovered near a three-month low to $1.055, the British pound to $1.216 and the U.S. dollar fetched 90.11 Swiss cents.
Brent crude decreased $0.29 to $89.35 a barrel and the Dutch TTF natural gas edged higher by €0.80 to €47.67 per MWh.
Europe Stock Movers
Luxury stocks in Paris and Switzerland edged down ahead of the release of the key economic data in China.
Hermes International, LVMH, Kering SA and Richemont declined between 0.3% and 1.5%.
China is scheduled to release third quarter GDP, retail sales and industrial output data later in the week.
Rolls-Royce Holdings PLC increased 0.6% to 214.90 pence after the UK-based aviation and defense contractor said it plans to eliminate 2,500 jobs.
Bellway Plc inched up 1% to 2,184.0 pence after the UK-based home builder estimated new home sales in the fiscal 2024 to drop as much as 31% citing elevated home prices and a surge in interest rates.
Lonza Group AG plunged 10.5% to CHF 383.60 after the Swiss product development services provider to pharmaceutical and nutrition companies issued an earnings warning citing the recent loss of business from Moderna.
LM Ericsson Class B dropped 8.6% to Skr 49.30 after the Swedish telecom equipment maker reported a decline in third quarter revenue.
Deutsche Post AG declined 1.4% to €38.48 and the Germany logistics company's subsidiary DHL said it plans to invest €350 million over the next five years in Southeast Asia to expand its workforce and warehousing capacity.
- Brian Turner
- 17 Oct, 2023
- New York City
Retail and food services sales unadjusted for inflation rose 0.7% from the previous month and advanced 3.8% from the previous year in September from an upwardly revised 0.8% increase in August.
The retail sales are adjusted for seasonal and calendar changes but not adjusted for price changes or inflation.
Retail trade sales were up 0.7% from August, and up 3.0% above last year and nonstore retail sales were up 8.4% and food services and drinking places sales were up 9.2% from a year ago respectively.
Retail sales rose for the sixth month in a row when measured on a monthly basis and advanced at the fastest pace in seven months on an annual basis.
The hotter-than-expected retail sales data lifted 10-year U.S. Treasury yield to 4.80% and the yield hovered near 16-year high.
Benchmark indexes traded down after the release of retail sales figures supported the case for one more rate hike in 2023 and higher rates through 2024.