There were plenty of important earnings reports to digest today, but stocks appeared to take their cues from good news on the U.S.-China trade front with the major equity benchmarks approaching all-time highs on word that trade talks are progressing in positive fashion.
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“They made headway on specific issues and the two sides are close to finalizing some sections of the agreement,” according to a statement out earlier today from U.S. Trade Representative Robert Lighthizer’s office.
President Trump is pushing to sign the first phase of the trade accord next month at the Asia-Pacific Economic Cooperation in Chile.
The trade talk helped the Nasdaq Composite advance 0.70%, while the S&P 500 gained 0.41%. The Dow Jones Industrial Average powered higher by 0.57%. Give the Nasdaq some credit. Today’s gains were built without much from Amazon (NASDAQ:AMZN), which was beaten up after its third-quarter earnings report. Or maybe Amazon itself deserves some credit because it closed the day at $1,761, well above the day lows around $1,695.
On Thursday, I mentioned the importance of Intel’s (NASDAQ:INTC) earnings report in terms of propping up the semiconductor space in the wake of the disaster that was Texas Instruments (NASDAQ:TXN) earlier this week.
Intel delivered in epic fashion, surging almost 8% to easily rank as the Dow’s best-performing member today. The semiconductor giant posted third-quarter earnings of $1.42 per share on revenue of $19.2 billion. Those numbers absolutely crushed what Wall Street was expecting, which was $1.24 per share on $18.1 billion.
Two of this year’s most frequently mentioned Dow dogs, Caterpillar (NYSE:CAT) and 3M (NYSE:MMM), were the next best performers in the blue chip index today after Intel. Certainly in the case of Caterpillar, these were probably China news-driven trades. Both companies reported earnings earlier this week and neither report was particularly strong, so today’s bounces in these embattled names may be no more than trades, not opportunities to be long these stocks for lengthy time frames.
Verizon Communications (NYSE:VZ) reported decent third-quarter results earlier today, but investors weren’t overly enthusiastic about the numbers as the stock was one of the Dow losers on the day.
Verizon said it earned $1.25 per share on revenue of $32.9 billion, beating Wall Street estimates of $1.24 a share on revenue of $32.7 billion. Making matters interesting in terms of Verizon’s price action today was subscriber growth that beat estimates. In theory, the stock should have been up on that news.
“The company’s consumer unit added a net 193,000 new wireless postpaid lines and its business segment added a net 408,000,” according to Barron’s. “That leaves a total of 601,000 new customers who receive a monthly bill, a closely watched metric for wireless companies. Wall Street analysts had been expect 524,000 new postpaid wireless subscribers.”
Another Surprise Loser
Dow high-fly act Procter & Gamble (NYSE:PG) was one of the index’s offenders today, which is surprising given the tenor of a Morgan Stanley note out earlier today on the stock.
Morgan Stanley analyst Dara Mohsenian said “P&G is likely to be able to increase its revenues faster than its peers even if it raises prices only modestly, given its broad-based strength,” according to Barron’s.
He reiterated an “overweight” rating and $134 price target on the Dow component.
Bottom Line on the Dow Jones Today
Next week brings another raft earnings reports, including some big-name technology stocks and some members of the Dow Jones Industrial Average. With that in mind, this earnings season has been decent relative to earlier expectations.
“To date, 40% of the companies in the S&P 500 have reported actual results for Q3 2019. In terms of earnings, the percentage of companies reporting actual EPS above estimates (80%) is above the five-year average,” according to FactSet Research data. “In aggregate, companies are reporting earnings that are 3.8% above the estimates, which is below the five-year average. In terms of sales, the percentage of companies (64%) reporting actual sales above estimates is above the five-year average. In aggregate, companies are reporting sales that are 1.1% above estimates, which is also above the five-year average.”
As of this writing, Todd Shriber did not hold a position in any of the aforementioned securities.
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