Stocks ended sharply lower on Thursday, after weak earnings
from Whole Foods and Qualcomm dragged down the S&P 500 and
Nasdaq. However, Twitter made an impressive debut on the bourses
yesterday. Meanwhile, a number of government reports were
published yesterday. These reports along with Friday's much
awaited job's numbers will give investors some insight into how
long the Fed will continue with its stimulus program. All the
sectors in the S&P 500 industry groups ended in the red, led
by consumer discretionary stocks. The S&P 500 index dropped
the most since August.
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Ahead of Wall Street
The Dow Jones Industrial Average (DJI) declined 1% to close the
day at 15,593.98. The S&P 500 fell 1.3% to finish yesterday's
trading session at 1,747.15. The tech-laden Nasdaq Composite
Index dropped 1.9% to end at 3,857.33. The fear-gauge CBOE
Volatility Index (VIX) surged 9.8% to settle at 13.91.
Consolidated volumes on the New York Stock Exchange were 4.16
billion shares. Declining stocks outnumbered the advancers. For
76% shares that declined, only 22% advanced.
Twitter Inc. (NYSE:
) made its debut on Thursday. Share prices of Twitter rose 77% to
$45.98 from its $26 initial public offering (IPO) price set on
Wednesday. Prices had increased to more than $50 during the
trading day. Eventually, Twitter ended the trading day at $44.9
per share, lower than its opening price but 73% higher than its
European equities ended flat yesterday, despite rallying in the
early stages, after the European Central Bank (ECB) cut its
primary interest rate to 0.25% from 0.50%. The FTSEurofirst 300
Index, which represents the broader European market, closed the
end of the day without overall losses or gains. European shares
dropped further later during the day.
In earnings news, shares of Qualcomm dropped 3.8% to $67.09,
which ended up as one of the biggest laggards on both the S&P
500 and the Nasdaq. Whole Food's disappointing results
dragged its shares down over 11%, Moreover, Tesla Motors Inc.
) shares continued the slide and dropped 5.8% yesterday after a
third Model S vehicle reportedly caught fire on Wednesday. This
development comes shortly after the company announcing
disappointing third quarter results.
Meanwhile, the GDP report showed that the U.S. economy displayed
growth of 2.8% in the third quarter. This was significantly
higher than consensus estimate of 2%. It was also appreciably
more than the figure of 2.5% recorded in the second quarter. The
primary factors behind the increase are a higher level of
business inventory investment, a hike in government spending and
a reduction in imports.
The Board of Governors of the Federal Reserve System reported
that consumer credit increased by $13.7 billion in September from
previous month's figure of $14.2 billion. This was above the
consensus estimate of $12 billion. Nonrevolving credit increased
at an annual rate of 8%. However, revolving credit declined at
annual rate of 2.3%. In September, consumer credit increased at a
seasonally adjusted annual rate of 5.5%.
Additionally, the U.S. Department of Labor reported that initial
claims had decreased by 9,000 to 336,000 in the week ending
November 2 from previous week's figure of 345,000. However,
jobless claims numbers were higher than the consensus estimate of
The Bloomberg consumer index dropped for the sixth week to 37.9.
The index also reached its lowest level in a year. The
buying-climate measure dropped to negative 42, a five month low.
The gauge of personal finances was down to negative 4.9, the
worst since December.
The consumer discretionary sector was the worst performer among
the S&P 500 industry groups. The Consumer Discretionary SPDR
(XLY) lost 2.1%. Stocks such as Amazon.com, Inc. (NASDAQ:
), Comcast Corporation (NASDAQ:
), The Walt Disney Company (NYSE:
), The Home Depot, Inc. (NYSE:
), and McDonald's Corporation (NYSE:
) slipped 3.5%, 1.2%, 2.7%, 0.9%, 0.7%, respectively.