Benchmarks finished in the green after weaker-than-expected economic reports eased investor concerns about the Fed trimming its bond buying program in its next meeting. Consequently, the S&P 500 closed at a new high and the Dow Jones closed a few points lower than its previous record high. A number of government reports were published on Tuesday. Retail sales declined in the month of September. Consumer Staples and Energy stocks were the biggest gainers among all the S&P 500 industry groups.
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The Dow Jones Industrial Average (DJI) gained 0.7% to close the day at 15,680.35. The S&P 500 added 0.6% to finish Tuesday’s trading session at 1,771.95. The tech-laden Nasdaq Composite Index increased 0.3% to end at 3,952.34. The fear-gauge CBOE Volatility Index (VIX) declined 0.8% to settle at 13.41. Total volume on the NYSE was 3.4 billion shares. Advancing stocks outnumbered the decliners. For 59% shares that advanced, 37% declined.
The Fed commenced its two day FOMC policy meeting on Tuesday. Market watchers believe Fed officials might not reduce the pace of bond buying following a series of weak economic reports and the political impasse that led to the 16-day partial government shutdown. The Fed will probably wait a little longer to assess the impact of these events on the U.S. economy and take decisions accordingly.
Apple Inc. (NASDAQ:AAPL) announced its fourth quarter earnings on Monday after the closing bell. The
company’s earnings and revenue came in above the Street’s estimates. Despite beating expectations, shares declined 2.5% after the company’s gross margins projection for the current quarter came in below forecasts. Apple’s net income declined 8.5% to $7.5 billion from the year ago figure of $8.2 billion. Revenue fell 4% to $37.5 billion from $35.97 billion a year earlier. Speaking on the results, Apple CEO Tim Cook said “We’re pleased to report a strong finish to an amazing year with record fourth quarter revenue, including sales of almost 34 million iPhones”. Investors were also disappointed by the fact that Apple’s profits and margins declined despite selling 33.8 million iPhones.
Pfizer Inc. (NYSE:PFE) reported its quarterly numbers on Tuesday. Earnings beat the Street’s estimates due to cost reductions and increasing sales of cancer medicines approved recently. The company earned $2.59 billion, in comparison with $3.21 billion a year ago. However, global sales fell 7% to $12.64 billion, hit by generic competition for cholesterol fighter Lipitor and other medicines.
Oil giant BP plc. (NYSE:BP) also posted its third-quarter earnings. Profits beat estimates, helping the company raise its dividend by 5.6%. The company announced it would sell off $10 billion worth of assets over the next two years.
According to the US Department of Commerce, retail sales for the month of September declined by 0.1% in the month of September. This was contrary to the consensus estimate of an increase of 0.4%. Retail trade sales were down 0.2% from August, but 3.1% above last year. Non store retailers gained 8.9% compared to a year ago and miscellaneous store retailers improved 6.2 % during the same period.
The Conference Board Consumer Confidence Index for the month of October came in at 71.2 compared to previous month’s reading of 80.2. This was also below the consensus estimate of 74.3. The Present situation Index decreased to 70.7 from September’s reading of 73.5. However, the Expectations index fell to 71.5 from previous month’s reading of 84.7.
According to the US Department of Labor, the US Producer Price Index for the month of September decreased 0.1%, contrary to the consensus estimate of an increase 0.2%. The decline in the producer price index is mainly attributable to the prices of finished consumer foods which declined 1.0%. Prices for finished consumer foods fell 1.0% in September. The price index for finished energy goods advanced 0.5 % in September month, followed by a 0.8% rise in August.
Energy and Consumer Staples were the biggest gainers among the S&P 500 industry groups. The Consumer Staples sector SPDR (XLP) gained 0.9%. Stocks such as, the Procter & Gamble Company (NYSE:PG), the Coca-Cola Company (NYSE:KO), Philip Morris International Inc. (NYSE:PM), CVS Caremark Corporation (NYSE:CVS) added 1.4%, 0.5%, 0.5% and 1.3% respectively.
The Energy SPDR (XLE) gained 0.7%. Stocks such as Exxon Mobil Corporation (NYSE:XOM), Chevron
Corporation (NYSE:CVX), Schlumberger Limited. (NYSE:SLB) and ConocoPhillips (NYSE:COP) added 0.8%, 0.5%, 1.2% and 0.6% respectively.