Better-than-expected quarterly results keep the momentum going
US stocks ended the midweek affair on a flat note on Wednesday, 19 October 2016 as investors responded to a fresh batch of quarterly earnings reports and a rally in crude oil futures. The broader market inched higher at the start of the session as better-than-expected quarterly results from members of the energy and financial sectors helped boost risk appetite in the broader market.
The Dow Jones Industrial Average advanced 40.68 points, or 0.2%, to finish at 18,202.62 and the tech-heavy Nasdaq Composite Index rose 2.58 points to close at 5,246.41. S&P 500 index rose 4.69 points, or 0.2%, to close at 2,144.29.
Eight sectors ended in positive territory with energy, financials, materials and consumer discretionary leading the pack.
Among earning reports, Morgan Stanley climbed 1.9% after it reported a profit that beat analyst forecasts. The stock was the latest in a string of financials including Goldman Sachs and J.P. Morgan Chase, that topped consensus expectations and boosted equities.
Intel was the worst performer in both the Dow and the S&P 500 after it reported a disappointing revenue outlook, even as its third-quarter earnings rose almost 9%. The stock slumped 5.9%.
A reading of economic conditions, known as the Federal Reserve's beige book, showed that parts of the U.S. economy grew at a moderate pace. The anecdotal account of economic conditions at the Fed's districts was released half an hour after gold futures settled. Metals were little-changed after the report.
Data released early Wednesday showed that U.S. housing starts ran at an annual 1.047 million pace in September. That was 9% lower than in August. The downbeat economic data could dull prospects for an interest-rate increase by the Federal Reserve before the year is up. Separately, the MBA Mortgage Index indicated that mortgage applications rose 0.6% in the week ending October 15. This followed a 6.0% decrease in the prior week.
The next Fed meeting is Nov. 1-2, but expectations for a rate increase at that meeting, so close to the election, are slim. Those odds rise sharply, to around 60%, for a December hike, although investors continue to question how aggressive the Fed will need to be.
Bullion prices ended higher at Comex on Wednesday, 19 October 2016. Gold futures on Wednesday logged a third straight session, climbing to their best level in two weeks, as the U.S. dollar continued to trade off multimonth highs hit earlier this month on the back of a drop in monthly domestic housing starts.
December gold rose $7, or 0.6%, to settle at $1,269.90 an ounce. December silver climbed by 2.5 cents, or 0.1%, to $17.663 an ounce after tapping a low of $17.57.
Crude oil futures rallied on Wednesday, 19 October 2016 at Nymex with the U.S. benchmark settling at a roughly 15-month high after U.S. government data revealed a surprise drop in crude stockpilesthe sixth decline in seven weeks. Prices got off to an upbeat start after an official from Saudi Arabia said crude producers who aren't OPEC members have shown willingness to join the cartel's effort to limit output.
November West Texas Intermediate crude which expires at Thursday's settlement, gained $1.31, or 2.6%, to settle at $51.60 a barrel on the New York Mercantile Exchange. December Brent crude rose 99 cents, or 1.9%, to $52.67 a barrel on London's ICEFutures exchange, for its highest finish in over a week.
The U.S. Energy Information Administration early Wednesday reported that domestic crude supplies dropped by 5.2 million barrels in the week ended 14 October. Market had expected a 2.5 million-barrel climb. Among the products, gasoline supplies rose by 2.5 million barrels, while distillate stockpiles fell by 1.2 million barrels.
Treasuries finished on a flat note as yields finished little changed across the curve. The yield on the 2-yr note settled at 0.80% while the yield on the benchmark 10-yr note finished at 1.74%.
Today's trading volume fell below the average of 853 million as 798 million shares changed hands at the NYSE floor.
Thursday's economic data will include the 8:30 ET release of weekly initial claims (consensus 249k) and the Philadelphia Fed Survey for October (consensus 5.5). Separately, the September Existing Home Sales Report (consensus 5.30 million) and September Leading Indicators (consensus 0.2%) will be released at 10:00 ET.
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