Wall Street advanced on Thursday as investor sentiment was buoyed by a string of corporate earnings beats and encouraging geopolitical developments. A broad-based rally led all three major US stock averages to moderate gains. Britain and the European Union agreed to a severance deal, moving closer toward wrapping up three years of uncertainties after Britons voted to leave the bloc.
Upbeat statements from Beijing and Washington fueled hopes that a phased agreement could ease the long-running US-China trade war that has rattled markets for months. And Turkey agreed to pause its Syria assault to allow for the withdrawal of Kurdish forces. "The Turkish cease fire is viewed positively," said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco. "Good news for Trump is good news for the market."
"From an investment perspective, the market likes the Trump agenda," Massocca added. Analysts now see third-quarter S&P 500 earnings falling by 2.9%, according to Refinitiv I/B/E/S, marking the first contraction since the earnings recession that ended mid-2016. But of the 63 companies in the S&P 500 that have reported so far, 82.5% have come in above estimates.
"(Results have) been good, but we haven't really gotten enough data points yet to see how earnings will be versus expectations," Massocca said. "Bring on Google, bring on Amazon, bring on Facebook, bring on Deere." Morgan Stanley rounded out big bank earnings with better-than-expected third-quarter profits, driven by bond trading and M&A advisory strength, sending its shares up 1.5%.
Streaming pioneer Netflix Inc advanced 2.5% after the company reported a rebound in subscribers in the third quarter. The Dow Jones Industrial Average rose 24.18 points, or 0.09%, to 27,026.16, the S&P 500 gained 8.28 points, or 0.28%, to 2,997.97 and the Nasdaq Composite added 32.67 points, or 0.4%, to 8,156.85.
Of the 11 major sectors in the S&P 500, all but technology closed in the black, with healthcare, real estate and communications services enjoying the largest percentage gains. In other earnings news, shares of International Business Machines Corp were the biggest drag on the blue-chip Dow, sinking 5.5% after missing quarterly revenue estimates.
Honeywell International Inc's quarterly results fell short of analyst expectations, but positive geopolitical developments helped the international conglomerate gain 2.4%. On the economic front, a spate of underwhelming data supported the notion that the longest period of expansion is US history could be running out of steam. Housing starts, industrial production and mid-Atlantic factory output all fell short of economist expectations.
Advancing issues outnumbered declining ones on the NYSE by a 2.10-to-1 ratio; on Nasdaq, a 1.90-to-1 ratio favored advancers. The S&P 500 posted 36 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 60 new highs and 60 new lows. Volume on US exchanges was 6.01 billion shares, compared with the 6.79 billion average over the last 20 trading days.
Friday's late afternoon trade: Wall Street weighed by Boeing, J&J, bleak China data
NEW YORK: Wall Street fell on Friday as negative headlines about Johnson & Johnson and Boeing and bleak economic data from China soured investor risk appetite, offsetting generally positive corporate earnings. While the three major US stock averages were in negative territory, they were all on track to end the week higher. Boeing Co and Johnson & Johnson shares led the blue-chip Dow's decline.
Boeing dropped 4.8% after Reuters reported that text messages between two employees suggested the planemaker misled the Federal Aviation Administration about the safety of the grounded 737 MAX aircraft. Johnson & Johnson announced it would recall baby powder in the United States after regulators found trace amounts of asbestos in a sample, sending its shares falling 5.6%.
Growth of China's gross domestic product slowed to its weakest pace in nearly 30 years as the bruising trade war with the United States took its toll, stoking fears of slowdown contagion. "Earnings have been coming in better than expected, but it doesn't mesh with economic data that have been coming out recently, and the global growth forecasts," said Robert Pavlik, chief investment strategist, senior portfolio manager at SlateStone Wealth LLC in New York. "That's keeping some investors on the sideline."
Third-quarter earnings season has hit full stride, with 73 companies in the S&P 500 having reported. Of those, 83.6% have come in above average estimates, according to Refinitiv data. American Express Co reported better-than-expected third-quarter profit as consumers boosted their spending. Still, the credit card issuers shares dipped 1.0%.
Coca-Cola Co's revenue topped Street estimates as consumers took to zero-sugar sodas and smaller soft drink cans. The beverage maker's upbeat forecast gave its shares a 2.1% boost. The Dow Jones Industrial Average fell 166.44 points, or 0.62%, to 26,859.44, the S&P 500 lost 7.53 points, or 0.25%, to 2,990.42 and the Nasdaq Composite dropped 59.67 points, or 0.73%, to 8,097.18. Of the 11 major sectors in the S&P 500, six were in the red, with communications services and tech suffering the biggest percentage declines.
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