By Sue Chang and Anora M. Gaudiano, MarketWatch
Seagate Technology surges after profits
U.S. stock-market indexes took a pause from a string of record
highs on Monday as major benchmarks came under pressure, with
traders weighing the prospects for tax cuts and a mixed bag of
earnings results.
What are stock indexes doing?
The S&P 500 index was off by 2 points, or 0.1%, to 2,572,
after setting an intraday all-time high in early trade. The Nasdaq
Composite Index slipped 14 points, or 0.2%, to 6,614.
The Dow Jones Industrial Average clung to positive territory, up
2 points to 23,331, in part helped by gains in Home Depot Inc.
(HD), Nike Inc. (NKE) and Johnson & Johnson (JNJ), all up more
than 1%.
The major U.S. stock indexes scored all-time closing highs on
Friday, marking the 24th time in 2017 that all three main
benchmarks simultaneously closed at records
(http://www.marketwatch.com/story/dow-sp-shape-up-for-more-records-after-senate-clears-big-hurdle-to-tax-reform-2017-10-20).
What's driving the market?
Tepid trading comes amid lack of clarity surrounding future tax
cuts. Expectations for a major tax overhaul have been credited with
helping spur a rally in U.S. stocks in the wake of Trump's
presidential election win in November.
Last week The Wall Street Journal reported that there are
proposals about capping the amount that Americans may contribute
before taxes to 401(k) plans as a way to generate revenue. However,
President Trump tweeted this morning, saying that there will be no
changes to 401(k) rules, which he called "a great and popular
middle class tax break that works."
Read:What's next for a tax overhaul after the Senate passed its
budget
(http://www.marketwatch.com/story/whats-next-for-a-tax-overhaul-after-the-senate-passed-its-budget-2017-10-20)
What are strategists saying?.
"It feels like the market is resting after making all-time highs
across the board. People are still focused on earnings and are
definitely banking on tax cuts," said Ian Winer, head of the
equities division at Wedbush Securities. "But with each day we keep
seeing that things that are proposed to offset the cuts are killed
and today it was 401(k) plans."
Quarterly results are a key driver for stocks with nearly 200
companies slated to report earnings this week.
"Earnings remain a solid tailwind for equity prices," said
Robert Doll, chief equity strategist at Nuveen Asset Management
LLC, in a report. "Just over 20% of S&P 500 companies have
announced third-quarter results. Earnings are beating expectations
by 4.5% and revenues by 1.0%. This compares to the long-term
historical average of 4.7% and 0.3%, respectively. Earnings per
share are on track to rise 8% for the quarter."
See:Stocks are incredibly overbought--why that's not as scary as
it sounds
(http://www.marketwatch.com/story/stocks-are-incredibly-overbought-why-thats-not-nearly-as-scary-as-it-sounds-2017-10-23)
What are other assets doing?
The Japanese yen fell and the Nikkei 225 index rallied after
Prime Minister Shinzo Abe's coalition easily won a majority in
Japan's snap parliamentary election
(http://www.marketwatch.com/story/japans-abe-wins-by-a-landslide-now-aims-to-change-constitution-2017-10-23)
on Sunday. Abe's win raises the prospect for continued
accommodative monetary policy, which tends to weaken the yen and
boost stocks in the country.
Read:Japan's Nikkei rises for a 15th straight session after
Abe's election win
(http://www.marketwatch.com/story/japans-nikkei-rises-for-a-15th-straight-session-after-abes-election-win-2017-10-23)
Other Asian markets closed mixed, while European stocks mostly
were higher.
The dollar rose, continuing higher on the prospect of tax cuts.
The ICE Dollar Index climbed 0.2% and metals were largely lower,
pressured by the stronger greenback.
Oil prices
(http://www.marketwatch.com/story/oil-prices-seesaw-as-traders-focus-on-iraq-disruptions-us-shale-2017-10-23)
gained after the Organization of the Petroleum Exporting Countries
said over the weekend that production cuts exceeded agreed levels
by 20%. The cartel also said "all options are left" for rebalancing
the market, seen as reinforcing the view that the output pact will
be extended when OPEC meets in November.
Which stocks are in focus?
Shares of disk-drive maker Seagate Technology PLC(STX) surged
12% after the company handily beat earnings estimates for its
fiscal first quarter.
Tesla Inc.(TSLA) shares reversed early gains to fall 0.6% in the
wake of news that the electric car company will set up a factory in
China
(http://www.marketwatch.com/story/tesla-reaches-deal-to-set-up-a-factory-in-china-2017-10-22).
Halliburton Co. (HAL) shares fell 2.3% even as earnings beat
forecasts
(http://www.marketwatch.com/story/halliburton-earnings-revenue-beat-estimates-2017-10-23).
Deltic Timber Corp.(DEL) rallied 5% after the timberland holding
company agreed to merge
(http://www.marketwatch.com/story/deltics-stock-set-to-surge-after-merger-deal-with-potlatch-2017-10-23)
with Potlatch Corp. (PCH), creating a company with a total
enterprise value of $4 billion.
Hasbro Inc. (HAS) plunged 8.5% after providing a downbeat sales
outlook
(http://www.marketwatch.com/story/hasbro-beats-profit-and-revenue-expectations-but-gives-downbeat-sales-growth-outlook-2017-10-23).
Rival Mattel Inc.(MAT), which is scheduled to report results on
Thursday, also fell, trading 3.5% lower.
Cisco Systems Inc. shares (CSCO) were 0.8% higher after a
Bloomberg News report that the company is nearing a deal to buy
(http://www.marketwatch.com/story/cisco-reportedly-close-to-acquiring-broadsoft-2017-10-22)
telecommunications-focused software company BroadSoft
Inc.(BSFT).
Shares of VF Corp.(VFC)jumped 5% after the company raised its
guidance
(http://www.marketwatch.com/story/shares-of-wrangler-parent-vf-corp-rise-after-earnings-beat-and-raised-outlook-2017-10-23).
What data are traders watching?
The Chicago Fed national activity index for September improved
to 0.17 in September from negative 0.37 in August.
--Sara Sjolin contributed to this report.
(END) Dow Jones Newswires
October 23, 2017 14:42 ET (18:42 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.