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Dow Jones Today: Domestic Focus Wins Out

Todd Shriber

Traders up early today were treated to some dismal PMI reports out of Germany and France, the Eurozone’s two largest economies. Fortunately, focusing on the U.S. was the order of the day as the Dow Jones Industrial Average posted a modest gain to start the week.

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While European data continues to dither, indicating much of that region is flirting with recession, there are a slew of domestic data points due out this week that will likely prove more important for stocks. Tomorrow, the Case-Schiller Home Price Index is due out along with the September consumer confidence.

“The U.S. manufacturing sector hit a five-month high in September, while the services sector grew at its fastest pace in two months, according to data from IHS Markit,” according to CNBC.

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However, the devil was in the details for that report released earlier today because IHS Markit said prospects for manufacturing look “gloomy.”

Still, stocks cobbled together some gains with the Nasdaq Composite fell 0.06% while the S&P 500 closed lower by 0.01%. The Dow Jones Industrial Average added 0.06%. In late trading, 24 of the 30 Dow stocks were pointed higher, one of the better ratios in recent weeks.

Earnings, Yes, Earnings

It’s not the end of the third quarter quite yet, but some earnings reports are trickling in. For the Dow, the ball gets rolling tomorrow when Nike (NYSE:NKE) reports. Investors may be expecting solid numbers as highlighted by Nike’s 1.17% gain today.

Analysts are expecting Nike to post fiscal first-quarter earnings of 71 cents a share on sales of $10.43 billion, up from 62 cents a share on revenue of $10.18 billion in the previous quarter. Historical data indicate there are reasons for optimism with the Nike report.

“Nike has a history of outperforming expectations: Last quarter aside, the company’s earnings per share have beaten analyst estimates every quarter for the past five years,” according to Barron’s.

Dow Apple News

What’s a day of Dow evaluation without some mention of Apple(NASDAQ:AAPL)? I suspect the answer is “unusual” and there were some credible Apple headlines out today. Apple recently unveiled the iPhone 11, which is expected to be the last iteration of the popular smartphone before the company moves to 5G technology next year.

In what can be seen as some interesting Apple news, the usually aspirational iPhone may see its sales buoyed by lower-cost versions of the iPhone 11.

“PiperJaffray’s Michael Olson wrote in a note Monday morning that based on his firm’s polling, demand for U.S. iPhones may be higher for the lower-priced devices rather than the premium models,” reports Barron’s.

In trade-related news, tariff-sensitive Apple said it will build the latest version of the Mac Pro in Texas, not China. It would not be surprising to the see the White House score some political points on the back of those headlines.

Credit Card Rewards

No, I’m not talking miles and points. I’m talking about American Express (NYSE:AXP) gaining 1.23% today to lead the Dow. Favorable buyback and dividend news did the trick.

“American Express approved the repurchase of up to 120 million common shares, in accordance with the company’s capital plans that are, from time to time, reviewed and not objected to by the Federal Reserve,” according to a statement. “Separately, the board of directors approved a $0.04 – or 10 percent – increase in the quarterly dividend on the company’s common stock. The dividend was raised to $0.43 per common share, from $0.39, payable on November 8, 2019 to shareholders of record on October 4, 2019.”

Dow Bottom Line: Data Dependency

To take a page from the Federal Reserve’s playbook, stocks will likely be data dependent this week due to the aforementioned slew of economic reports expected. Thursday should be a busy day on that front with jobless claims, another third-quarter GDP reading and pending home sales.

On the stock-specific side, I know Nike is just one name, but as a consumer cyclical stock, the company’s Tuesday earnings report and what management says about tariffs could prove critical in terms of gauging risk appetite when earnings season really gets rolling next month.

Todd Shriber does not own any of the aforementioned securities.

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