Indices register good monthly gains though
U.S. stocks closed lower on Thursday, 31 October 2013 as investors digested the possibility that the Federal Reserve may taper bond buys sooner than expected, but gains for the month made it the best October for stocks across the board in three years. Equity indices spent most of the session near their respective flat lines even after many companies reported their quarterly results between yesterday's close and today's opening bell.
The Dow Jones Industrial Average dropped 73.01 points, or 0.5%, to close at 15,545.75. The Nasdaq Composite Index declined 10.91 points, or 0.3%, to finish the day at 3,919.71, for a 3.9% October gain. The S&P 500 Index fell 6.77 points, or 0.4%, to finish at 1,756.54. For the month of October, however, the S&P 500 gained 4.5%. For October, the Dow industrials advanced 2.8%.
Nine out of ten economic sectors ended in the red. The only sector that gained Thursday was consumer discretionary, while consumer staples and financials performed the worst.
The blue-chip index was led by Dow component Exxon Mobil after its earnings report early Thursday, but hurt by a post-earnings slide from Visa.
Among other earnings of note, Chevron also announced above-consensus earnings, but ended lower by 0.3%. Facebook posted a gain of 2.4% after enduring some after-hours drama yesterday. The social media stock jumped as high as 14.0% in reaction to its solid quarter, but relinquished the gain after company management said during the conference call that a decline in daily traffic among younger users has been observed.
In overseas news of note, eurozone unemployment (12.2% actual versus 12.0% expected) and CPI (0.7% actual versus 1.1% consensus) came in well-below estimates, which stoked expectations for additional liquidity provisions from the European Central Bank.
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Economic data at Wall Street showed that weekly initial claims decreased to 340,000 from 350,000 (consensus 335,000). This initial claims report represented the first clean reading for the labor market since August as issues with California's numbers have now been ironed out. Unfortunately, the report reflected a modest increase in layoff levels over the past couple of months. The continuing claims level increased to 2.881 million from a downwardly revised 2.859 million (from 2.874 million). The consensus pegged the continuing claims level at 2.850 million.
Separately, the October Chicago PMI registered its largest one-month spike in more than 30 years, jumping to 65.9 from 55.7 (consensus 55.0). We are skeptical that the sharp increase is legitimately showing vast improvement in the manufacturing sector. Most of the Federal Reserve regional manufacturing surveys were either flat or softened slightly from lost demand due to the government shutdown. In contrast, the manufacturers in the Chicago region recorded their strongest activity since March 2011.
Bullion metals ended substantially lower on Thursday, 31 October 2013. Gold futures fell by more than $20 an ounce on Thursday, as traders mulled the timing of a scale back in the Federal Reserve's bond-buying program. The Fed on Wednesday maintained the pace of bond-buying, but kept tapering plans on the table.
Gold for December delivery lost $25.60, or 1.9%, to settle at $1,323.70 an ounce on the Comex division of the New York Mercantile Exchange. December silver was hit even harder, giving up $1.12, or 4.9%, to end at $21.87 an ounce.
Crude oil futures fell on Thursday, 31 October 2013 at Nymex with prices tallying a monthly loss of almost 6% on the back of growing U.S. supplies of crude. December crude oil shed 39 cents, or 0.4%, to settle $96.38 a barrel on the New York Mercantile Exchange. Prices lost 5.8% for the month, their second monthly loss in a row.
As per latest report, EIA reported that crude supplies rose 4.1 million barrels in the week ended 25 October 2013 outpacing market expectations. Market was looking for a climb of 3.5 million barrels. The weekly increase was the sixth in a row reported by the government agency.
Trading volume was subdued until the last 30 minutes of action when a surge in trading activity sent equity indices to lows while pushing the final NYSE volume tally over 900 million shares.
Tomorrow, the October ISM Index will be released at 10:00 ET.
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