Market Performance
The stock market closed mostly higher after a soft start to the week. A buy-the-dip action contributed to the positive bias, driven by surging shares of Tesla (TSLA, Financial) following impressive Q3 earnings and a 2025 vehicle growth estimate. Additionally, a drop in market rates supported the upward trend, with the 2-year yield settling two basis points lower at 4.07% and the 10-year yield four basis points lower at 4.20%.
Index Overview
- The S&P 500 closed 0.2% higher but remains 0.9% lower since Friday.
- The Nasdaq Composite rose by 0.8% but is still down 0.4% for the week.
- The Dow Jones Industrial Average underperformed, dropping 0.3% due to losses in IBM (IBM), Honeywell (HON), and Boeing (BA).
Individual Stock Performance
IBM and Honeywell reported earnings results, while Boeing saw a decline as workers voted 64% against accepting the latest contract proposal.
Positive Movers
- Whirlpool (WHR) gained 11.2%.
- Mattel (MAT) increased by 4.4%.
- Lam Research (LRCX) rose 5.1%.
- ServiceNow (NOW) climbed 5.4%.
Negative Movers
- Union Pacific (UNP) fell 4.4%.
- United Rentals (URI) dropped 1.1%.
- Harley Davidson (HOG) decreased by 7.2%.
Sector Highlights
The S&P 500 communication services sector was a top performer, jumping 3.2% thanks to Tesla (TSLA, Financial) and Amazon.com (AMZN). Conversely, the materials sector recorded the largest decline, down 1.4% from the previous day.
Year-to-Date Index Performance
- Nasdaq Composite: +22.7% YTD
- S&P 500: +21.8% YTD
- Dow Jones Industrial Average: +12.4% YTD
- S&P Midcap 400: +12.5% YTD
- Russell 2000: +9.5% YTD
Economic Data Review
- Weekly Initial Claims: 227K (consensus 246K); Prior revised to 242K from 241K
- Weekly Continuing Claims: 1.897 million; Prior revised to 1.869 million from 1.867 million
The key takeaway is that initial claims data suggest a labor market that remains robust, far from recession-like conditions, despite potential noise from hurricane effects.
October Economic Indicators
- S&P Global US Manufacturing PMI - Prelim: 47.8; Prior: 47.3
- S&P Global US Services PMI - Prelim: 55.3; Prior: 55.2
September New Home Sales
New Home Sales reached 738K (consensus 713K); Prior revised to 709K from 716K. The key takeaway is that new home sales likely benefited from a drop in mortgage rates in September, but higher rates now may negatively impact October sales.
Guru Stock Picks
Bruce Berkowitz has made the following transactions:
- Reduce in JOE by 0.96%
Steven Cohen has made the following transactions:
- New position in DRUG
Today's News
Capri Holdings (CPRI, Financial) experienced a dramatic 52% drop in after-hours trading following a federal judge's decision to block its $8.5 billion sale to Tapestry (TPR, Financial). The court ruled that the merger would reduce competition in the "accessible luxury" market, a move supported by the Federal Trade Commission. Conversely, Tapestry saw a 15% increase in its share price as it argued against the FTC's market definition.
Tesla (TSLA, Financial) saw a remarkable 22% increase in its stock price, driven by strong Q3 earnings. The electric vehicle company surpassed expectations with an automotive ex-credits gross margin of 17.1% and an operating margin of 10.8%. This surge made Tesla the 12th most valuable company in the U.S., surpassing the likes of Broadcom (AVGO) and Walmart (WMT).
Dexcom (DXCM, Financial) shares fell 14% in post-market trading after its Q3 earnings report showed a modest 2% revenue growth year-over-year. Despite beating EPS expectations by $0.02, the company's U.S. revenue declined by 2%, overshadowing a 12% international revenue growth.
Exxon Mobil (XOM, Financial) and Qatar Energy received a three-year extension for their Golden Pass LNG project in Texas due to delays from their lead contractor's bankruptcy. The extension aims to keep the project on track as negotiations with McDermott International (MCDIF) continue for a new contractor.
Spirit AeroSystems (SPR, Financial) may furlough or lay off more employees due to an ongoing strike at Boeing (BA). The strike, which involves over 32,000 workers, has already led Spirit to prepare for a 21-day furlough for about 700 workers, potentially affecting production of Boeing's 737 Max parts.
Digital Realty (DLR, Financial) stocks rose 5.9% in after-hours trading following a strong Q3 report that met analyst expectations. The company raised its 2024 core FFO guidance, driven by record leasing activity which significantly increased its backlog.
Perplexity, an AI-powered search engine, responded to a copyright infringement lawsuit from News Corp-owned entities like Wall Street Journal and New York Post. The lawsuit accuses Perplexity of using copyrighted content to generate search answers, highlighting ongoing tensions between media companies and AI firms.
BlackRock (BLK, Financial) launched three new ETFs to help investors diversify their portfolios amid concerns over the dominance of megacap tech stocks. The ETFs aim to provide exposure to large U.S. companies while also offering options to avoid them, reflecting a shift in investor sentiment as market dynamics evolve.
Western Digital (WDC, Financial) reported Q1 earnings with a Non-GAAP EPS of $1.78, surpassing expectations by $0.07. The company continues to navigate a challenging market environment with strategic adjustments as it plans for future growth.
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