U.S. equities notched modest gains with Heath Care stocks leading the way due to what has been a pretty good earnings season for the sector thus far. Solid earnings out of Netflix, which beat expectations in regard to both for earnings and subscription additions, which led to a very good day for the stock and more broadly, boosted the Communications sector. Alcoa fell short of estimates, but announced a strategic review of its assets in an effort to return to profitability. Results from Honeywell International and Union Pacific were mixed. U.S. economic data showed that housing starts and building permits dipped lower, jobless claims rose less than expectations, soft regional manufacturing data, and industrial production fell. Treasury yields were slightly higher and the U.S. dollar was down. Crude oil prices fell today and gold continued its recent rally. The big news of the day came from across the pond, where it was announced that the European Union (EU) and the United Kingdom (U.K.) have agreed to a deal. However, the agreement needs to be accepted by parliament in the U.K. and early indications are that the Democratic Unionist Party (DUP) of Northern Ireland is not satisfied with the deal, which could seriously hinder the deal’s chances in parliament. International equities in Europe and Asian finished the day mostly lower.
The Dow Jones Industrial Average (DJIA) was up 24 points (0.1%) to 27,026, the S&P 500 Index added 8 points (0.3%) to 2,998 and the Nasdaq Composite picked up 33 points (0.4%) to 8,157. In light volume, 726 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq. WTI crude oil ticked $0.60 higher to $53.93 per barrel and wholesale gasoline was flat at $1.62 per gallon. The Bloomberg gold spot price increased $1.50 to $1,495.50 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was down 0.4% to 97.60. 1,256,000 units, below the Bloomberg forecast of 1,320,000 units. August starts were revised higher to an annual pace of 1,386000. Moreover, building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future construction, fell 2.7% m/m to an annual rate of 1,387,000, versus expectations of a 1,350,000 pace, and compared to August’s upwardly-revised 1,425,000 rate.
Weekly initial jobless claims rose by 4,000 to 214,000, versus the Bloomberg estimate of 215,000, with the prior week’s figure unrevised at 210,000. The four-week moving average increased by 1,000 to 214,750, while continuing claims declined by 10,000 to 1,679,000, north of estimates of 1,675,000.
The Philly Fed Manufacturing Index in October decreased to 5.6, from the 12.0 posted the month prior, versus expectations of a decline to 7.6, but remaining in expansion territory (a reading above zero).
The Federal Reserve’s industrial production fell 0.4% month-over-month (m/m) in September, more than the Bloomberg estimate of a 0.2% decrease, and August’s upwardly-adjusted 0.8% rise. Manufacturing and mining output fell, with the former negatively affected by a large strike in the automotive industry, while utilities grew. Capacity utilization decreased to 77.5% from the prior month’s unrevised 77.9% rate, and versus the expected 77.6%. Capacity utilization is 2.3 percentage points below its long-run average.
Treasuries were slightly lower, with the yields on the 2-year and 10-year notes, along with the 30-year bond, each increasing a basis point to at 1.60%, 1.75% and 2.24%, respectively. Despite the increases last week, yields remain historically low and overseas there is a massive amount of negative yielding debt.
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