After The Close - Another rollercoaster ride this week on Wall Street—mostly driven by the soap opera on Capitol Hill—ended on a strong note for those long equities. The investment community—already emboldened by a temporary agreement reached earlier this week to end the government shutdown and raise the U.S. debt ceiling—reacted positively to some good quarterly earnings news from Corporate America (see below) and data that showed China’ s economy grew at its quickest pace this year in the third quarter. Further, growing sentiment among economic pundits that Federal Reserve will keep its highly accommodative monetary policies in place when it meets later this month also gave a boost to equities the last few days.

Thus, at the closing bell, the S&P 500 Index—which established another all-time high today—and the NASDAQ—helped by the performance of some high profile tech stocks—were notably higher. The Dow Jones Industrial Average also was able to overcome a sluggish start to the day and post a modest gain. Investors also should note that the small-cap Russell 2000 and the S&P Mid-Cap 400 Index finished nicely higher, suggesting that investors were willing to take on more risk, likely prompted by the aforementioned “kick the can down the road” deal crafted by the Senate—and later approved by the House. The greater appetite for risk is also reflected in the recent performance of the S&P 500 Volatility Index (or VIX). The index, which is also known as the fear gauge, finished at 13 today after topping 20 last week on concerns about the political bickering on Capitol Hill. Overall, advancing issues led decliners by a considerable margin on both the New York Stock Exchange and the NASDAQ.

From a sector perspective, it was a productive day for most of the top-10 groups, though none of the sectors stood out too much from the pack. Mild leadership did come from the energy and industrial groups, which were helped by the aforementioned favorable GDP data from China. The world’s second-largest economy is a huge consumer oil and buyer of industrial equipment. Not surprisingly, crude prices moved higher on the New York Mercantile Exchange. Meantime, it was not a great day for those who held healthcare stocks, as that sector was sluggish throughout the session. The healthcare space was hurt by the stocks of companies specializing in biotechnology. In particular, Intuitive Surgical (ISRG) shares fell after the biotech company missed its revenue expectations. Still, all in all, it has been a very good year thus far for the healthcare issues.

As noted, an earnings season that has thus far produced mixed results did provide more cheers than jeers today. Specifically, investors were happy with the latest quarterly results from Google (GOOG) and shares of technology behemoth topped the $1,000-a-share mark before finally settling at $1,011. Meanwhile, shares of Dow-30 component General Electric (GE - Free General Electric Stock Report) finished higher despite the fact the conglomerate missed its both top- and bottom-line expectations. Investors were glad to see improving sales of complex equipment at GE, which provides some hope that the company's transformation into an industrial powerhouse is succeeding. The Google report, along with positive results from Capital One (COF), Morgan Stanley (MS), and Schlumberger (SLB), were welcomed news after disappointing quarterly results from Goldman Sachs (GS - Free Goldman Sachs Stock Report) and International Business Machines (IBM - Free IBM Stock Report) earlier this week. Looking ahead, next week will bring a heavy dose of earnings news, highlighted by the latest quarterly results from 10 Dow-30 companies.

Meantime, the economic reports will begin to flow in again next week, including some of those that were delayed by the government shutdown. Of note, the Labor Department said it would release its employment report for September on Tuesday; that report was originally scheduled to be released on October 4th. Investors are sure to pay extra attention to the employment and unemployment statistics, as they are sure to be closely examined by the Federal Reserve leading up to its two-day monetary policy meeting that commences on October 29th. We also will get the latest data on existing and new home sales. Still no dates have been rescheduled for the release of the reports on industrial production, retail sales, producer and consumer prices, and housing starts and building permits.

Looking ahead to next week, the earnings and economic news are likely to have a more significant role in what direction trading takes, especially with the fiscal worries on the back burner, at least for the moment, and the Federal Reserve not scheduled to meet until the following week. It should be noted that only a small portion of the S&P 500 companies have reported their latest quarterly results, so investors will face no shortage of news over the next few weeks. - William Fergusson

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


12:30 PM EST - The U.S. stock market has put in a selectively higher session so far today, as traders look to extend recent gains. There are likely a few reasons for the exuberance. The nation seems to be on a stabilized political footing in the very short term. The third-quarter earnings season has been mixed to constructive for the most part. There is also a sense that the Fed will probably be maintaining its current policy, for now. Further, traders also received some decent some economic news from China, and strength in the international markets overnight is likely helping sentiment here at home. At past noon in New York, the Dow Jones Industrial Average is off 10 points; but the broader S&P 500 Index is up seven points; and the NASDAQ, which is once again taking the leadership role, is tacking on 35 points.

Almost all of the market sectors are moving higher today. The technology stocks are advancing sharply, with some buying in the Internet names, and notable strength in Google (GOOG), which rose past $1,000 a share. The energy issues are also doing well today, with gains in the oil equipment stocks. This sector is also probably being helped by slightly higher crude oil prices today. In contrast, there is some declines in the healthcare area, largely due to weakness in shares of some health care providers.

Technically, the S&P 500 Index is at new all-time high ground, which is likely a strong technical indicator. Moreover, volumes have been strong over the past few sessions, suggesting some commitment to rally. Elsewhere, the VIX, which dipped sharply yesterday, is down to about 12.90 today, suggesting traders have turned more optimistic, and possibly overly so.

There were no notable economic reports issued this morning. However, traders did receive a batch of earnings reports to digest.  Notably, we received encouraging reports from General Electric (GE - Free General Electric Stock Report), Morgan Stanley (MS), and Schlumberger (SLB). Those issues are also trading higher, as a result. Meanwhile, things did not go as well for Intuitive Surgical (ISRG) as that stock is off sharply. While discussing earnings, it might be worth noting that, in general, the stock market is now trading at a somewhat elevated price-to-earnings multiple, making it important for companies to meet expectations, and provide healthy year-ahead guidance.   – Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


Stocks to Watch from The SurveyEarnings reports continue to flow, and two of today’s biggest winners appear to be Internet search giant Google (GOOG) and Align Technology (ALGN), maker of Invisalign braces. Indeed, both equities are up sharply ahead of the bell, after the two companies reported September-interim results that topped investors’ expectations. Other stocks indicating higher openings this morning on earnings news include industrial conglomerate General Electric (GE), restaurant operator Chipotle Mexican Grill (CMG), oilfield services companies Baker Hughes (BHI) and Schlumberger (SLB), investment bank Morgan Stanley (MS), and hotel/casino operator Las Vegas Sands (LVS).

On the other hand, investors took issue with third-quarter results from Advanced Micro Devices (AMD), a maker of integrated circuits, diversified manufacturer Honeywell (HON), and medical supplies company Intuitive Surgical (ISRG), all of which are trading lower in the premarket. – Matthew E. Spencer

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

Before The Bell - Well, it wasn't quite a case of "buy the rumor, sell the news," that old Wall Street mantra, which holds that stocks will often rise on expectations, but retreat, when the objectives are met. Still, there was selective pressure applied to the Dow Jones Industrial Average for much of the session yesterday, as that 30-stock blue chip composite was only able to make a brief appearance in the plus column during the final minutes of trading, one day after the Congress and the White House finally agreed to end the partial government shutdown and avoid a default by raising the debt ceiling. At its worst levels of the day, the Dow had been off by more than 135 points; the final bell saw it lose just two points. Conversely, the NASDAQ jumped by 24 points, while the small-and-mid-cap indexes performed admirably.

All told, the principal averages continued to rally, but more modestly than on Wednesday, when expectations were high that the full Congress would pass the budget deal that had been hammered out by leaders in the Senate earlier in the day. The overwhelmingly affirmative vote by that body and the lesser majority in the lower chamber had been largely discounted. Hence, the muted response yesterday by the bulls.

Also, we will need to revisit these twin issues in approximately three months, and that, too, may have proven a bit deflating. What's more, a trio of Dow-30 components, International Business Machines (IBMFree IBM Stock Report), UnitedHealth (UNHFree UnitedHealth Stock Report), and Goldman Sachs (GSFree Goldman Sachs Stock Report), with the last company being one of the three newest Dow members, posted underwhelming results, and that pressured the blue-chip index for much of the day. Overall, though, stocks had a notably positive bias by the close.

Meanwhile, it was another limited day for economic news, although we did get reasonably decent figures on jobless claims, which backed off somewhat in the latest seven-day stretch. That is a critical metric, as we have not had many other issuances from the federal government recently with the aforementioned government shutdown. We would expect the reports to gradually return in the coming weeks. Our sense also is that the economy has taken a hit due to the strident activity in the Capitol, and what looked like it would be a better than 2% gain in fourth-quarter GDP, may now be closer to 1.5%--or even less, if confidence levels continue to falter in the weeks ahead and holiday shopping stagnates, as some economists now suspect will be the case.   

Now, as we look ahead to a new day, we find that the markets in Asia were up nicely overnight, while the bourses in Europe are posting modest gains this morning. And over here, some compelling top- and bottom-line metrics from Internet search engine giant Google (GOOG) are helping to send our futures up sharply on the NASDAQ, where an opening gain of some 17 points is expected. The suggested gains in the Dow and on the S&P 500 Index are more modest. As for the aforementioned Google, however, the stock, which closed yesterday at over $888 a share, and which has topped out at $928 over the past 52 weeks, is indicated to commence the new trading day at $972 a share. Can $1,000 be far away?

Finally, now that the government standoff has been settled for about three months, and we are seeing better growth overseas, especially from China again, the focus will once more be on the Federal Reserve, as our nation's central bank is scheduled to hold its next FOMC meeting on October 29th and 30th. The broad consensus is that the Fed will now keep its stimulus in place for longer than earlier suggested following the confidence-sapping U.S. fiscal impasse, which, as noted, is not fully behind us. – Harvey S. Katz

At the time of this article's writing, the author did not have positions in any of the companies mentioned.