[BRIEFING.COM] Stocks slipped from record highs on Thursday amid a heap of corporate news and the start of the third quarter earnings season. The S&P 500 and the Nasdaq lost 0.2% apiece while the Dow Jones Industrial Average (-0.1%) held up slightly better. Equities spent some time in positive territory, but eventually settled near their session lows.
Financial heavyweights JPMorgan Chase (JPM 95.99, -0.85) and Citigroup (C 72.37, -2.57) kicked off the third quarter earnings season on Thursday morning. Both lenders reported better-than-expected earnings and revenues, but moved lower nonetheless, tumbling 0.9% and 3.4%, respectfully. Other financials followed suit, sending the S&P 500's financial sector lower by 0.7%.
The financial group will be in focus once again on Friday morning, as that's when Bank of America (BAC 25.45, -0.38) and Wells Fargo (WFC 55.21, -0.45) are scheduled to report their quarterly results.
Like financials, consumer discretionary stocks within the S&P 500 struggled on Thursday, losing 0.7%. Cosmetic retailer Ulta Beauty (ULTA 190.16, -17.73) showed particular weakness, settling the day lower by 8.5%, after Cleveland Research downgraded ULTA shares to 'Neutral' from 'Buy' in pre-market action.
Women's apparel retailer J.Jill (JILL 4.86, -5.07) was hit even harder, plunging 51.1%, after lowering its forecast for third quarter same-store sales.
Unsurprisingly, the SPDR S&P Retail ETF (XRT 39.88, -0.53) tumbled 1.3%, finishing below its 50-day simple moving average (40.13) for the first time in over a month. Retailers will be in the spotlight once again on Friday morning, which is when investors will get their hands on the Retail Sales Report for September (Briefing.com consensus +1.5%).
AT&T (T 35.86,-2.33) led the lightly-weighted telecom services group (-3.5%) to the bottom of the sector standings on Thursday, dropping 6.1% in reaction to an announcement that its video subscribers declined for the third quarter in a row. Fellow wireless giant Verizon (VZ 48.35, -0.51) also dropped, losing 1.0%.
On a positive note, transports had a good showing, sending the Dow Jones Transportation Average higher by 0.6%. Railroad names like CSX (CSX 53.58, +0.50) showed particular strength after JPMorgan raised the company's target price to $62 from $58. CSX shares finished higher by 0.9%.
The top-weighted technology sector (unch) spent much of the day in positive territory, but slipped in the final stretch as mega-caps like Alphabet (GOOG 987.83, -1.42), Facebook (FB 172.55, -0.19), and Apple (AAPL 156.00, -0.55) retraced their earlier gains. Microsoft (MSFT 77.12, +0.70) held strong though, adding 0.9%.
In Washington, President Trump signed an executive order related to health care on Thursday that's aimed at providing more options for consumers and stepping up competition within the space. The health care sector (-0.2%) finished roughly in line with the broader market.
WTI crude futures declined 1.3% to $50.61 per barrel, despite the EIA reporting a larger-than-expected draw in U.S. crude stockpiles for the week ended October 6 (2.8 million barrels actual vs 2.4 million barrels consensus). The energy sector, which typically moves in tandem with oil prices, lost 0.4%.
In IPO news, CarGurus (CARG 27.58, +11.58)--which hosts an online marketplace for new and used vehicles--opened for trading today at a price of $29 per share after pricing its IPO at $16 per share. The company eventually settled at $27.58 per share, which is more than 70.0% above its IPO price.
U.S. Treasuries moved higher in a curve-flattening trade, sending yields into the red. The benchmark 10-yr yield dropped three basis points to 2.32%.
Reviewing Thursday's economic data, which included the Producer Price Index for September and the weekly Initial Claims Report:
- Producer prices rose 0.4% in September, which is in line with the Briefing.com consensus. Meanwhile, core producer prices rose 0.4%, which is above the 0.2% increase that the Briefing.com consensus expected. Year-over-year, core producer prices are up 2.2%.
- The key takeaway from the report is that it will feed the view that the Federal Reserve is on course to raise the fed funds rate again in December. The latter view stems from the understanding that the final demand index increased 2.6% for the 12 months ended in September, marking the largest rise since a 2.8% advance for the 12 months ended February 2012. Meanwhile, the final demand index less foods and energy increased 2.2% for the 12 months ended in September versus 2.0% for the 12 months ended in August.
- The latest weekly initial jobless claims count totaled 243,000 while the Briefing.com consensus expected a reading of 255,000. Today's tally was below the revised prior week count of 258,000 (from 260,000). As for continuing claims, they declined to 1.889 million from the revised count of 1.921 million (from 1.938 million).
- The key takeaway from the claims data is that it is consistent with a tight labor market, which some members of the Federal Reserve think poses an upside inflation risk.
On Friday, investors will receive the Consumer Price Index for September (Briefing.com consensus +0.6%) at 8:30 ET, Retail Sales for September (Briefing.com consensus +1.5%) also at 8:30 ET, the preliminary reading for the University of Michigan Consumer Sentiment Index for October (Briefing.com consensus 95.6) at 10:00 ET, and Business Inventories for August (Briefing.com consensus +0.7%) also at 10:00 ET.
- Nasdaq Composite +22.5% YTD
- Dow Jones Industrial Average +15.6% YTD
- S&P 500 +13.9% YTD
- Russell 2000 +10.9% YTD