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Stock Market News For Oct 30, 2019

Benchmarks closed in the negative territory on Tuesday due to Alphabet’s weak earnings report and uncertainties in timely completion of U.S-China Phase one deal.

The Dow Jones Industrial Average (DJI) slid 0.1% or 19.3 points to close at 27,071.42. The S&P 500 fell 0.1% or 2.53 points to close at 3,036.89. Meanwhile, the Nasdaq Composite Index closed at 8,276.85, decreasing 0.6% or 49.13 points. The fear-gauge CBOE Volatility Index (VIX) increased 0.2% to close at 13.23. Advancers outnumbered decliners on the NYSE by a 1.15-to-1 ratio. On Nasdaq, a 1.03-to-1 ratio favored advancing issues.

How Did The Benchmarks Perform?

The S&P index recorded 35 new 52-week highs and no new lows, while the Nasdaq recorded 69 new highs and 45 new lows. Merck & Co., Inc. MRK and Pfizer Inc.’s PFE shares jumped 3.5% and 2.5%, respectively after companies reported better-than-expected third-quarter earnings. This in turn boosted the S&P 500’s healthcare sector pushing it to rise 1.4%.

Alphabet’s Weak Earnings Dented Sentiments

Alphabet Inc. GOOGL reported third-quarter 2019 non-GAAP earnings of $10.12 per share, missing the Zacks Consensus Estimate of $12.57. The earnings declined due to heavy investment in the cloud-computing business as the company hired 6,450 new employees in Q3 to rise above strong competitors like Amazon and Microsoft. In fact, Alphabet has also invested heavily in its artificial intelligence and consumer hardware, which was were also reasons behind earnings slump. (Read More)

Shares of Alphabet that carries a Zacks Rank #3 (Hold) fell 2.2% on Oct 29.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, other behemoths including Merck and Pfizer came out with upbeat results.

Merck & Co. reported third-quarter earnings of $1.51 per share, beating the Zacks Consensus Estimate of $1.25. The 27% year over year rise came from cancer drugs, especially Keytruda, and Gardasil vaccine and a strong performance in international markets for some products like Zetia and Vytorin. (Read More)

Pfizer reported third-quarter 2019 earnings result of 75 centsshare surpassing the Zacks Consensus Estimate of 63 cents. Sales were high in Pfizer Biopharma’s segment, especially in brands like Eliquis, Ibrance, Inlyta and Xeljanz, and a strong emerging markets performance. (Read More)

Hurdles in Trade Front Dampens Investor’s Sentiments

Positive news in the U.S.-China trade deal progress had lifted the market on Oct 28, but investors got demotivated on Tuesday after a Reuters exclusive report cited ‘U.S. -China trade deal may not be ready for signing in Chile.’ Both the countries are working on the trade deal but it might not be complete in time when President Donald Trump and China’s President Xi Jinping meet next month.

Tough U.S. administration official emphasized that it doesn’t mean that the deal will fall apart but this did drag stocks down on Tuesday afternoon.

Rising Anticipation on Third Time Fed Rate Cut

Investors’ however are turning attention towards the Federal Reserve’s two day meeting. Thought a rate cut decision highly rests on U.S. GDP data that will be published on Oct 30 morning, investors are expecting easier policy to support the economy.

Fed’s meeting that will end on Oct 30, will also consider consequences of a decline in expectations for inflation.

Economic Data

As per the Conference Board’s report on Oct 29, the consumer confidence index edged down to 125.9 from a revised 126.3 in September. The index had been through a roller coaster ride after its 18-year high of 137.9 in October 2018 as a result of the U.S.-China trade war.

Lynn Franco, director of economic indicators at the Conference Board said that “Confidence levels remain high and there are no indications that consumers will curtail their holiday spending,”

Stocks That Made Headline

Automatic Data Processing Q1 Earnings Top, Revenues Lag

Automatic Data Processing, Inc. ADP reported mixed first-quarter fiscal 2020 results, wherein the company’s earnings surpassed the Zacks Consensus Estimate but revenues missed the same. (Read More)

Verisk Q3 Earnings Miss Estimates, Revenues Beat

Verisk Analytics VRSK reported mixed third-quarter 2019 results, wherein the company’s earnings lagged the Zacks Consensus Estimate but revenues surpassed the same. (Read More)

Concho Q3 Earnings Miss on Weak Prices, Revenue Tops

Concho Resources Inc. CXO reported net income per share (excluding special items) of 61 cents, lagging the Zacks Consensus Estimate of 66 cents and significantly below the prior-year period’s $1.42. The underperformance can be attributed to lower commodity price. (Read More)

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