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Stock Market News For Nov 2, 2018

Zacks Equity Research
Eni (E) seems to be a good value pick, as it has decent revenue metrics to back up its earnings, and is seeing solid earnings estimate revisions as well.

U.S. stock markets closed sharply higher on Thursday following a positive tweet by President Donald Trump regarding trade relations with China. Upbeat investor sentiment was sustained by solid earnings results from some big companies. All three major stock indexes finished in the green.

The Dow Jones Industrial Average (DJI) closed at 25,380.74, rising 1.1% or 264.98 points. The S&P 500 Index (INX) also gained 1.1% to close at 2,740.37. The Nasdaq Composite Index (IXIC) closed at 7,434.06, climbing 1.8% or 128.16 points. A total of 9.1 billion shares were traded on Thursday, higher than the last 20-session average of 8.7 billion shares. Advancers outnumbered decliners on the NYSE by 3.21-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 3.46-to-1 ratio.  The CBOE VIX decreased 8.9% to close at 19.34.

How Did the Benchmarks Perform?

The Dow ended in positive territory for third-straight day. Notably, twenty one components of the 30-stock blue-chip index closed in the green while the remaining nine finished in the red.The tech-laden Nasdaq Composite closed in positive territory for three consecutive days due to strong performance of large-cap technology stocks.

Meanwhile, the S&P 500 also closed in the green, led by a 2.8% rise in Materials Select Sector SPDR (XLB), 2% gain in Consumer Discretionary Select Sector SPDR (XLY) and 1.8% increase inIndustrials Select Sector SPDR (XLI). Notably, ten out of total 11 sectors of the benchmark index closed in the green while one finished in the red. For the first time in six weeks, the broad-market index finished on a winning note for three successive days.

US-China Trade Tensions Abates

On Nov 1, President Trump tweeted that he had a “long and very good conversation” with his Chinese counterpart Xi Jinping. The conversation between the two leaders focused primarily on lingering tariff related conflicts and other trade-related policy matters.

Although the material impact of this conversation is yet to be realized, Trump did tweet that “those discussions are moving along nicely”. Notably, the two leaders are expected to meet each other in the upcoming G-20 summit in Argentina, later this month. 

Further, Larry Kudlow, top economic advisor of the Trump administration, was optimistic about a positive outcome from the upcoming negotiation between the two leaders. A positive outcome will enable China to avoid a new set of tariffs worth $267 billion which the United States has threatened to impose on the country in December if negotiations fail.

Solid Earnings Results

Impressive earnings results from some big corporates also bolstered investors’ confidence. Shares of DowDuPont Inc. DWDP surged 8.1% following third-quarter results wherein the bottom line surpassed the Zacks Consensus Estimate while top line fell below the same. (Read More)

Shares of ABIOMED Inc. ABMD jumped 10.5% after posting impressive fiscal second quarter 2019 earnings results wherein both the top and bottom line outpaced the Zacks Consensus Estimate. (Read More). ABIOMED carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Economic Data

On Nov 1, the Institute for Supply Management (ISM) reported that the U.S. manufacturing index for the month of October stood at 57.7 compared with 59.8 in September. The reading was also below the consensus estimate of 59.0. The ISM manufacturing index has declined for the second-straight month and its lowest level since April.

The new orders index in October fell 4.4 percentage points to 57.4. The reading for this index came below 60 for the first time since April 2017. However, any reading above 50 indicates overall growth for the manufacturing sector which constitutes 12% of the U.S.GDP.

The Department of Commerce reported that U.S. construction spending remained flat in September compared with the consensus estimate of a rise of 0.1%. The reading for August was revised upward to 0.8% from 0.1% reported earlier.

The Department of Labor reported that the U.S. nonfarm productivity in the third quarter of 2018 rose 2.2%, slightly better than the consensus estimate of an increase of 2.1%. Meanwhile, the second quarter reading was revised upward to 3% from 2.9%. Unit labor cost, in the third quarter rose 1.2%, higher than the consensus estimate of 1.1%.

U.S. jobless claims for state unemployment benefits declined 2,000 to a seasonally adjusted 214,000 for the week ended Oct 27, higher than the consensus estimate of 213,000. Meanwhile, continuing claims decreased 7,000 to 1.63 million for the week ended Oct 20, its lowest level since July 1973.

Stocks That Made Headlines

Gol Linhas Q3 Loss Wider, Revenues Miss Estimates

Gol Linhas Aereas Inteligentes S.A. GOL incurred a loss (excluding 27 cents from non-recurring items) of 32 cents, much wider than the Zacks Consensus Estimate of a loss of 10 cents. (Read More)

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