U.S. Stocks Mostly Higher as S&P 500 Notches New Record
By Kaitlyn Kiernan
The S&P 500 pushed to a record high Thursday even as investors wrestled with soggy earnings reports and turned their
focus away from Washington.
The Dow Jones Industrial Average was dragged lower by weak earnings reports from three of its blue-chip components.
But the S&P 500 made a fresh record, with many investors thinking damage done to the U.S. economy by the government
shutdown will lead the Federal Reserve to keep its easy-money policies in place longer than otherwise would have been
The S&P 500 index rose 11.61 points, or 0.67%, to 1733.15. That topped the Sept. 18 closing high of 1725.52.
The Dow Jones Industrial Average dropped 2.18 points, or less than 0.1%, to 15371.65. The blue-chip index recovered
from a loss of about 145 points early in the day. Leading the decline were two of the index's largest components--
International Business Machines and Goldman Sachs Group.
"Generally speaking, we're going to get back to stock picking," said Dan McMahon, director of equity trading at
Raymond James. "Now, it's all about earnings."
IBM slumped after reporting third-quarter revenue below analyst expectations amid a sharp decline in hardware sales.
Net profit, however, topped estimates. Goldman Sachs dropped after missing on revenue but topping earnings expectations,
citing a period of slow client activity.
Meanwhile, another Dow component, UnitedHealth Group, dropped after matching forecasts on earnings but falling shy on
The Nasdaq Composite Index added 23.71 points, or 0.62%, to 3863.15.
With the stalemate in Washington broken, investors now are assessing any damage done to the economy and what that will
mean for Fed policy, especially with Congress having to address the debt ceiling again by Feb. 7.
"Investors need to digest how much of an impact this will have, and what the chances are of a big problem again a few
months from now," said John Manley, chief equity strategist at Wells Fargo's funds unit, which manages about $200
billion in assets.
Despite Thursday's weakness, Raymond James's Mr. McMahon said it was difficult not to be optimistic, with the Fed
likely to keep its stimulus efforts in place. "Any selloff will be somewhat muted," he said, adding that he sees stocks
continuing to trend higher through the end of the year.
Mark Travis, chief investment officer at Intrepid Capital, which manages about $1.4 billion in assets, said with Janet
Yellen scheduled to take over as chief of the Fed, the stock market should have a tailwind as long as inflation remains
low and unemployment remains elevated.
But he said as investors bring more cash to the firm, he is finding it more difficult to invest "prudently."
"By and large, we're sitting on our hands a lot," Mr. Travis said, though he said there are opportunities in the
energy and mining sectors.
Companies in the S&P 500 index are on track for third-quarter earnings growth of 1.1% from last year, according to
FactSet. Excluding J.P. Morgan Chase's loss on hefty legal charges, they would be on pace for 3.6% growth. At the
beginning of earnings season, analysts expected earnings growth of 3%.
Elsewhere among companies reporting quarterly results, Verizon Communications gained after beating forecasts on strong
wireless-subscriber growth. The telecommunications sector was the strongest performer out of 10 industry sectors in the
Shares of eBay fell after third-quarter revenue missed estimates and the online auctioneer provided a disappointing
earnings outlook for the current quarter.
Initial claims for jobless benefits in the latest week fell to 358,000 from the previous week's revised 373,000,
compared with expectations of a drop to 330,000. The elevated level of claims continues to reflect processing delays in
The Philadelphia Federal Reserve's October index of manufacturing activity slipped less than expected to 19.8 from
September's 22.3. Economists had forecast a drop to 15.
The yield on the 10-year Treasury note fell to 2.587% from 2.669% late Wednesday. Yields move inversely to prices. The
dollar fell below 98 yen, while the euro pushed above $1.37 to approach an eight-month high.
November crude-oil futures lost 1.6% to $100.67 a barrel, for its lowest settlement in more than three months. October
gold futures jumped 3.2% to $1,322.70.
European stock markets pushed higher late in the day. The Stoxx Europe 600 finished up 0.1%, while in London the FTSE
100 index added 0.1%. Both indexes were up for a sixth-straight session.
Germany's DAX 30 index lost 0.4% after Germany's leading economic think tanks lowered a growth outlook.
Asian markets were mixed-to-higher in the wake of the U.S.'s budget deal. Japan's Nikkei Stock Average rose 0.8% and
Australia's S&P/ASX 200 gained 0.4%, while China's Shanghai Composite slipped 0.2%.
Write to Kaitlyn Kiernan at email@example.com
(END) Dow Jones Newswires
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