By Chris Matthews, MarketWatch , Sunny Oh
Netflix shares rally 2.5% after third-quarter results
Stock indexes on Thursday lost steam in the final minutes of
trade but finished near records, booking slight gains as investors
drew optimism from a Brexit draft agreement and upbeat
third-quarter results from U.S. companies such as Netflix, and
Morgan Stanley.
Read:EU and U.K. leaders say Brexit deal has been agreed
(http://www.marketwatch.com/story/eu-and-uk-leaders-say-brexit-deal-has-been-agreed-2019-10-17)
How did major indexes perform?
The Dow Jones Industrial Average rose 23.90 points, or 0.1%, to
27,025.88, while the S&P 500 index advanced 8.26 points, or
0.3%, to 2,997.95. The Nasdaq Composite Index gained 32.67 points,
or 0.4%, to 8,156.85.
Thursday's trade put the Dow about 1.2% from its July 15 closing
record at 27,359.16, the S&P 500 finished about 0.9% from its
July 26 closing record at 3,025.86, while the Nasdaq ended the
session 2.1% from its all-time closing high at 8,330.21 hit July
26.
What drove the market?
U.S. stocks reacted positively overall to the start of
third-quarter earnings reports and news that Britain was closing in
on ending a nearly four-year-old divorce saga with the EU.
"Even though it is very early in the Q3 earnings reporting
period, investors have been encouraged by the better-than-expected
results for the large diversified banks and selected health-care
companies," said Sam Stovall, chief investment strategist at CFRA,
in a note.
Overall, the U.S. corporate earnings season is off to a good
start. More than 78% of the S&P 500 index companies that have
reported so far have topped analyst earnings expectations,
according to FactSet.
Headlines pointing to a tentative Brexit deal helped to set the
stage for U.S. equity indexes and sent the British pound higher,
while also lifting European stocks
(http://www.marketwatch.com/story/mixed-corporate-results-from-nestle-and-unilever-keep-european-stocks-to-a-tight-range-2019-10-17).
However analysts cautioned that the agreement could still be
derailed. Northern Ireland's Democratic Unionist Party, a key ally
of U.K. Prime Minister Boris Johnson's Conservative Party, said it
remained opposed to the draft agreement.
See: What a Brexit deal would mean for U.S. stocks and global
investors
(http://www.marketwatch.com/story/what-a-brexit-deal-would-mean-for-us-stocks-and-global-investors-2019-10-17)
"It remains to be seen whether the reaction is short-lived as
the politicians go toe-to-toe again at the weekend, but in the
meantime the very possibility of an agreed outcome to the painful
Brexit saga has resulted in a relief rally, both financial and
psychological," said Richard Hunter, head of markets at Interactive
Investor.
Investors also digested a series of downbeat U.S. economic
reports though. The number of unemployed workers who applied for
jobless benefits
(http://www.marketwatch.com/story/jobless-claims-rise-slightly-to-214000-in-mid-october-but-remain-near-a-50-year-low-2019-10-17)in
the second week of October rose slightly, but layoffs nationwide
remained near a 50-year low and showed no sign of rising despite a
slowdown in the U.S. economy.
U.S. new-home construction fell 9% in September
(http://www.marketwatch.com/story/housing-starts-fall-9-in-september-but-high-permits-low-mortgage-rates-suggest-construction-slowdown-is-temporary-2019-10-17)
from the month before, while permits for new housing construction
were issued at a rate of 1.39 million homes, a 3% decline and below
the 1.38 million consensus expectations.
Industrial production fell 0.4% in September
(http://www.marketwatch.com/story/industrial-output-falls-by-most-in-five-months-pushed-lower-by-gm-strike-2019-10-17),
the largest one-month drop since April. Industrial capacity usage
slumped to 77.5 in September from 77.9 in the prior month. An index
of manufacturing activity
(http://www.marketwatch.com/story/philly-fed-manufacturing-index-stumbles-in-october-2019-10-17)
in Pennsylvania, Delaware and New Jersey fell to 5.6 in September
from 12.0 in August, below the 7.1 expected, according to
Econoday.
White House economic adviser Larry Kudlow said Thursday
(http://www.marketwatch.com/story/kudlow-says-us-china-have-come-further-than-ever-on-trade-deal-2019-10-17)
that the U.S. and China have come "further than we ever have
before" on a trade deal, in an interview with CNBC, noting that the
two sides have seen momentum in reason like financial services and
currency management.
"The chatter out of Washington and Beijing has been positive, so
the odds of a phase one pact being signed next month at the G7
summit is high," said Jerry Lucas, senior trading strategist at UBS
Global Wealth Management. "With that and Brexit progress, the world
is looking like a better place than two weeks ago."
T
(http://www.marketwatch.com/story/trumps-doral-golf-resort-in-miami-chosen-for-g7-summit-2019-10-17)he
White House announced the G-7 summit
(http://www.marketwatch.com/story/trumps-doral-golf-resort-in-miami-chosen-for-g7-summit-2019-10-17)
(http://www.marketwatch.com/story/trumps-doral-golf-resort-in-miami-chosen-for-g7-summit-2019-10-17)would
take place at Trump's resort in Miami.
New York Fed President John Williams was due to deliver a speech
and take part in a discussion in Manhattan at 4:20 p.m.
What companies were in focus?
Morgan Stanley(MS) shares rose 1.5% Thursday after the
investment bank reported third-quarter profits and sales that beat
Wall Street expectations.
Shares of Honeywell International Inc.(HON) gained 2.4% after
its third-quarter results topped Wall Street forecasts
(http://www.marketwatch.com/story/honeywells-stock-drops-after-profit-beat-and-guidance-raised-but-sales-fall-shy-2019-10-17).
Philip Morris International Inc.'s stock (PM) rose 1% as it
reported third-quarter results Thursday
(http://www.marketwatch.com/story/philip-morris-profit-tops-estimates-in-q3-but-sales-fall-short-lowers-full-year-eps-guidance-2019-10-17),
announcing that earnings fell less than analysts had anticipated,
though revenue rose less than expected.
Shares of Netflix Inc.(NFLX) added 2.5% on Thursday after it
reported third-quarter results
(http://www.marketwatch.com/story/netflix-stock-spikes-after-subscriber-growth-bounces-back-but-executives-admit-competition-will-hurt-the-rest-of-the-year-2019-10-16)
late Wednesday. The streaming service said it added 6.77 million
new paying subscribers in the quarter, with only 500,000 coming
from the U.S.
Opinion:Netflix finally admits the obvious: Competition from
Apple and Disney will hurt
(http://www.marketwatch.com/story/netflix-finally-admits-the-obvious-competition-from-apple-and-disney-will-hurt-2019-10-16)
Shares of International Business Machine Inc.(IBM) tumbled 5.5%
though after it reported less revenue than Wall Street expected
(http://www.marketwatch.com/story/ibm-stock-slips-after-revenue-misses-street-view-2019-10-16)
after Wednesday's closing bell.
Rail-based freight company CSX Corp. (CSX) managed to closed up
1.1% following its report late-Wednesday, which showed that
third-quarter profits unexpectedly rose and revenue fell in line
with analyst forecasts.
How did other markets trade?
The yield on the 10-year U.S. Treasury note was up 0.7 basis
point
(http://www.marketwatch.com/story/treasury-yields-climb-after-uk-strikes-tentative-brexit-deal-with-eu-2019-10-17)
to
(http://www.marketwatch.com/story/treasury-yields-climb-after-uk-strikes-tentative-brexit-deal-with-eu-2019-10-17)1.757%.
European stocks ended
(http://www.marketwatch.com/story/mixed-corporate-results-from-nestle-and-unilever-keep-european-stocks-to-a-tight-range-2019-10-17)
little changed after rising initially following the news of a
tentative Brexit deal, with the FTSE up 0.2% and the Stoxx Europe
600 off 0.1% at 393.08.
Oil futures finished higher Thursday, as the U.S. and Turkey
reached a cease-fire pact in Syria, temporarily easing Middle East
tensions, and a tentative Brexit deal fueled appetite for assets
perceived as risk, despite a rise in U.S. crude inventories.
(http://www.marketwatch.com/story/oil-lower-on-fears-of-us-crude-inventory-rise-2019-10-17)West
Texas Intermediate crude for November delivery gained 57 cents to
$53.93 a barrel
(http://www.marketwatch.com/story/oil-lower-on-fears-of-us-crude-inventory-rise-2019-10-17).
Gold prices ended at the highest price in a week
(http://www.marketwatch.com/story/gold-prices-bounce-around-as-investors-weigh-tentative-brexit-pact-2019-10-17),
(http://www.marketwatch.com/story/gold-prices-bounce-around-as-investors-weigh-tentative-brexit-pact-2019-10-17)up
$4.30 at $1,498.30 an ounce on Comex and the U.S. dollar fell 0.4%,
according to the ICE U.S. dollar index .
(END) Dow Jones Newswires
October 17, 2019 16:30 ET (20:30 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.