Stocks Falter on Earnings, Overseas Concerns

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"The key driver today seemed to be the global markets," noted Schaeffer's Senior Trading Analyst Bryan Sapp. "Nearly every European and Asian market closed lower for the session. However, despite global markets selling off, Caterpillar Inc. ( CAT ) missing badly on earnings, and the news that China is tightening its monetary policy, today's move lower was very muted, and small-caps continued to outperform the other indexes." Meanwhile, the Dow Jones Industrial Average (DJI) finished south of breakeven.

Continue reading for more on today's market, including :

plus...
    Caterpillar Inc. ( CAT ) reported a sharp drop in quarterly earnings, U.S. housing prices rose less than anticipated in August, and Apple Inc. ( AAPL ) secured a pair of price-target hikes.

The Dow Jones Industrial Average (DJI - 15,413.33) faltered almost right out of the gate, and touched an intraday low of 15,366.19 around 10:00 a.m. ET following some troubling developments out of China. By the close, the blue-chip barometer was down 54.3 points, or 0.4%. The Boeing Company ( BA ) led the Dow's eight advancers with an earnings-induced gain of 5.3%, while Caterpillar Inc. ( CAT ) paced the 21 decliners with a 6.1% loss -- spurred by its dismal earnings report. The Coca-Cola Company (KO) remained unchanged.

Similarly, the S&P 500 Index (SPX - 1,746.38) spent the session in negative territory, and finished 8.3 points, or 0.5%, lower. Meanwhile, the Nasdaq Composite (COMP - 3,907.07) snapped its streak of new intraday records, losing 22.5 points, or 0.6%, by day's end.

Conversely, the CBOE Volatility Index (VIX - 13.42) gained a bit of ground today to end 0.1 point, or 0.7%, higher, after touching an intraday peak of 14.21. However, the "fear gauge" is still on pace to finish a second consecutive week below its 20-week moving average.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

3 Things to Know About Today's Market :

  • Caterpillar Inc. ( CAT ) said its third-quarter earnings fell 44% to $1.45 per share, while revenue declined by 18% to $13.42 billion. Elsewhere, fellow blue-chip component The Boeing Company ( BA ) reported a 16% surge in adjusted net income for the same quarter , resulting in a per-share profit of $1.80. Meanwhile, sales rose 11% to $22.13 billion. (MarketWatch, Reuters)
  • The Federal Housing Finance Agency (FHFA) revealed that house prices in the U.S. edged just 0.3% higher in August, marking the narrowest advance in nearly a year. Economists, on average, were expecting a gain of 0.8%. (Bloomberg)
  • Overseas banking news was an early market driver today, after it was reported that several Chinese banks wrote off around $3.7 billion worth of bad debt between January and June of this year. (CNBC)

5 Stocks We Were Watching Today :

  1. Apple Inc. ( AAPL ) scored a pair of price-target hikes after revealing the latest versions of its iPad and iPad Mini yesterday.
  2. Call buyers bet on higher highs for Nokia Corporation (NOK) following the debut of the company's first tablet device.
  3. Put sellers flocked toward Adobe Systems Incorporated (ADBE) to wager on post-earnings support for the software concern.
  4. Expedia Inc (EXPE) saw a jump in put volume ahead of earnings, as traders focused on the December series of options.
  5. Option bears forecast an extended slide for Dendreon Corporation (DNDN) following its turn in the earnings confessional next month.

EARNINGS

For a look at today's options movers and commodities activity, head to page 2.

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Crude futures closed in the red once again, as a larger-than-expected increase in oil supplies for the week ended Oct. 18 weighed on prices. By the end of the session, the December contract dropped $1.44, or 1.5%, to settle at $96.86 per barrel -- marking the lowest closing price for a most-active contract since late June.

Meanwhile, gold futures also settled lower today, perhaps consolidating after yesterday's multi-week high closing price. December-dated gold lopped off $8.60, or 0.6%, to finish at $1,334 an ounce.

SCHAEFFER'S MARKET POSTURE



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.


This article appears in: Investing , Options

Referenced Stocks: AAPL , BA , CAT , JCP , TSLA

Schaeffer's Investment Research

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