Stocks Closed Lower Yesterday, Upbeat Earnings Were Seen After The Close Stocks closed lower yesterday, marking the third down day in a row for the Dow and the S&P, albeit the first down day for the Nasdaq in more than a week. Before-market earnings by AT&T and NextEra Energy helped them beat the weaker market tone yesterday. AT&T reported a positive EPS surprise of 1.69%, but a negative sales surprise of -1.10%. Nonetheless, they were up 4.61% yesterday following earnings. Same goes for NextEra Energy, which posted a positive EPS surprise of 5.10%, but a negative sales surprise of -10.5%. However, that translated to a quarterly EPS growth rate of 12.8% vs. this time last year, and a sales growth of 5.5%. They were up 1.45% yesterday following earnings. After the close we heard from Tesla, which reported a positive EPS surprise of 24.1%, but a negative sales surprise of -1.45%. That equated to a quarterly EPS growth rate of 9% vs. this time last year, and a sales growth of 8%. They were down -1.86% in the regular session before earnings. But they were up roughly 8% in after-hours trade following earnings. Today we'll get earnings from another 277 companies including names like Union Pacific, Honeywell and UPS to name a few. In other news yesterday, MBA Mortgage Applications were down -6.7% w/w with purchases down by -5.1% and refi's down by -8.4%. Existing Home Sales came in at 3.84 million units (annualized) vs. last month's upwardly revised 3.88M (from 3.86M) and views for 3.90M. That was a m/m change of -1.0%, and a y/y change of -3.5%. The Atlanta Fed Business Inflation Expectations report put inflation estimates at 2.2% over the next 12 months vs. last month's 2.1% estimate. And the Beige Book report showed weaker growth than some of the other reports have indicated. But contacts appear more optimistic for the longer-term outlook vs. the current report. Given that the Fed eyes the Beige Book report, amongst others, in helping to decide monetary policy, the weaker-than-expected readings make the case for another rate cut on November 7 when they meet again. Today's economic reports include Weekly Jobless Claims, the Chicago Fed National Activity Index, the PMI Composite Flash report, and New Homes Sales. With two days left in the week, the major indexes are in the red, so far. There's still plenty of time to turn the week around. But given the 6 up weeks in a row for the big three indexes, seeing a little profit taking should not come as a surprise. Regardless of what happens this week, with earnings season underway (stocks typically go up during earnings season), and this being the fourth quarter (Q4 is the best quarter for stocks), I'm expecting the bull market to continue and to end on an even stronger note by year's end. See you tomorrow, Kevin Matras Executive Vice President, Zacks Investment Research |
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