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Stock Market News For Oct 31, 2019

Benchmarks closed in the green on Wednesday as the Federal Reserve cut rates for the third time this year, and Chairman Jerome Powell signaled no rate hikes until he witness a “really significant” rise in inflation.

The Dow Jones Industrial Average (DJI) gained 0.4% or 115.27 points to close at 27,186.69. The S&P 500 rose 0.3% or 9.88 points to close at record level of 3,046.77. Meanwhile, the Nasdaq Composite Index closed at 8,330.21, rising 0.3% or 27.12 points. The fear-gauge CBOE Volatility Index (VIX) decreased 7.1% to close at 12.33. Decliners outnumbered advancers on the NYSE by a 1.35-to-1 ratio. On Nasdaq, a 1.42-to-1 ratio favored advancing issues.

How Did The Benchmarks Perform?

The interest-rate sensitive banking sub-sector incurred loss of 0.7%, after Fed announced of a 25 basis point rate cut. Utilities and healthcare were the best performing sectors, rising 0.9% and 0.5% respectively, whereas the energy sector was down 2.1%.

Johnson & Johnson JNJ shares rose 2.9% giving the Dow buoyancy after the company said it found no asbestos in the baby powder after 15 tests. Johnson & Johnson carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fed Cuts Rate for Third Time this Year

Investors’ sentiments got boosted on Wednesday as the Federal Reserve announced a third time rate cut this year by 25 points to between 1.50% and 1.75%. However, Powell also said that the economy is strong enough and doesn’t need more easing in the near future.

Stocks rose following Powell’s announcement post the press conference. Additionally, Powell mentioned that the Fed will only think of hiking rates after the central bank sees a “really significant” rise in inflation.

U.S. GDP Grew at 1.9%, Private Payrolls Increase

U.S. GDP, in the meantime, grew at an annualized rate of 1.9% in the third quarter down from the 2% pace of the second quarter. But, the data is higher than the consensus estimate of 1.6%.  The slight decline in Q3 was due to the continuous decline in business investment that slipped 1.5%.

The Commerce Department cited that continued consumer spending and government expenditures helped the economy expand. Personal consumption expenditure rose at a 2.9% annualized rate and the government spending grew at 2%.

Private payrolls by the way grew faster-than-expected in October, per ADP and Moody’s Analytics on Oct 30. Companies had hired 125,000 employees in October, 25,000 more job additions than the consensus estimate. However, September’s payrolls were decreased by 42,000 to 93,000. 

Jobs in the service sector increased by 138,000 this month, with a boost of 41,000 payroll increase in education and health services.  However, payrolls in goods-production businesses decreased by 13,000 this month, indicating a slowdown in manufacturing sector.

Better-than-Expected Quarterly Earnings

Investors’ sentiments stayed lifted with better-than-expected earnings from General Electric Company GE and CME Group Inc. CME.

General Electric reported third quarter earnings of $0.15 per share, beating the Zacks Consensus Estimate of $0.12, with an earnings surprise of 25%. The company’s industrial revenues grew 3.5% year over year to $21,383 million, while its organic revenues rose 7.1% from the year-ago quarter to $21,510 million (Read More)

CME Group reported third-quarter 2019 adjusted earnings of $1.90 per share, surpassing the Zacks Consensus Estimate by 8.6%.The company’s revenues of $1.3 billion increased 41.3% year over year. The company’s better-than-expected growth was driven by robust trading volume. (Read More)

Stocks That Made Headline

Apache Reports Wider Q3 Loss on Lower Oil Realizations

U.S. energy firm Apache Corporation APA reported third-quarter 2019 loss per share – excluding one-time items – of 29 cents, wider than the Zacks Consensus Estimate of 27 cents. In the year-ago period, the company reported adjusted profit of 63 cents. The underperformance stems from lower oil price realizations. (Read More)

Shell Q3 Earnings Beat Despite Softer Oil Prices

Europe’s largest oil company Royal Dutch Shell plc RDS.A reported earnings per ADS (on a current cost of supplies basis, excluding items - the market’s preferred measure) of $1.18, beating the Zacks Consensus Estimate of 98 cents. The beat was driven by strong performance from the company’s Downstream and Integrated Gas segments. (Read More)

Williams' Q3 Earnings Beat, Revenues Miss Estimates

Williams Companies, Inc. WMB reported third-quarter 2019 adjusted earnings per share (EPS) from continuing operations of 26 cents, surpassing both the Zacks Consensus Estimate and the prior-year profit of 24 cents. Strong contribution from its Atlantic-Gulf and Northeast G&P segments led to this outperformance. (Read More)

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

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