Stocks Closed Mixed Yesterday, Nasdaq Hits New All-Time High Stocks closed mixed yesterday with the Dow and the small-cap Russell 2000 in the red, while the Nasdaq, S&P 500 and the mid-cap S&P 400 were in the green. The Nasdaq led the way with a 0.78% gain, and making a new all-time high and close in the process. Before the open, EPS beats by McDonald's (positive EPS surprise of 1.57%), Novartis (positive EPS surprise of 6.19%), and Pfizer (positive EPS surprise of 65.6%), were nice to see, but were unable to lift their respective shares on the day. After the close, we heard from Alphabet, which posted a positive EPS surprise of 15.9%, and a positive sales surprise of 2.34%. That translated to a quarterly EPS growth rate of 36.8% vs. this time last year, and a sales growth of 16.4%. They were up 1.81% in the regular session before earnings, and up roughly 5% in after-hours trade following earnings. Advanced Micro Devices also reported after the bell and showed a positive EPS surprise of 1.10%, and a positive sales surprise of 1.59%. That equated to a quarterly EPS growth rate of 31.4% vs. this time last year, and a sales growth of 17.6%. They were up 3.96% in the regular session before earnings, but down roughly -6% in after-hours trade following earnings. Today we'll get another 330 companies on deck to report, with Eli Lilly, Caterpillar and Automatic Data Processing going before the open, with Microsoft, Meta and DoorDash posting after the close. Tomorrow's earnings docket has 274 companies in queue to report, including Apple, Amazon, Merck, Uber and Bristol Myers to name a handful. Regarding economic reports, yesterday's Retail Inventories rose 0.8% m/m vs. last month's 0.7%.
Wholesale Inventories slipped -0.1% m/m vs. last month's 0.1%.
The Case-Shiller Home Price Index (unadjusted) was off -0.3% m/m vs. last month's 0.0% reading. On a y/y basis it was up 5.2% vs. last month's 5.9% pace and views for 5.2%. The Job Openings and Labor Turnover Survey report (JOLTS) came in at 7.443 million vs. last month's 7.861M and the consensus for 7.9M. That's down -5.78% m/m. Consumer Confidence, however, rose to 108.7 from last month's 99.2 and expectations for 99.1. That's a 9.58% increase. Today we'll get MBA Mortgage Applications, the ADP Employment Report, Q3 GDP, the Pending Home Sales Index, and the Survey of Business Uncertainty.
In other news, Larry Fink, CEO of BlackRock yesterday said he does not believe the Fed will cut rates as much as some are expecting. He contends that inflation is embedded more now than we've ever seen in the world. But he did not provide a level where he believes the Fed will call it quits. The Fed, however, has forecast two more 25 basis point rate cuts by year's end (the next one likely coming on 11/7 at the next FOMC Announcement). Looking further out, the Fed expects to cuts rates to as low as 3.4% in 2025. We'll get the next Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge, on Thursday, 10/31. The latest core reading (ex-food & energy) was 2.6%. If one were to assume that 100 basis points above inflation is the natural rate (aka the neutral rate), to allow for growth, but keep inflation in check, then bringing rates down to 3.6% is where things should be, which is -130 basis points (or roughly five more 25 bps rate cuts) from our current midpoint level of 4.9%. And as inflation declines further, the neutral rate should follow. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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