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Stock Market News For Oct 18, 2017

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Benchmarks finished higher on Tuesday after a slew of strong corporate earnings led gains for healthcare stocks. Both the Dow and the S&P 500 closed at record levels, with the blue-chip index touching the psychological 23,000 milestone for the first time in its 120-year history. Meanwhile, industrial production for September rebounded after two straight months in the lull.

The Dow Jones Industrial Average (DJIA) closed at 22,997.44, gaining 0.2%. The S&P 500 Index (INX) increased 0.1% to close at 2,559.36. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,624, decreasing a little below half a point. A total of 5.5 billion shares were traded on Tuesday, lower than the last 20-session average of 5.9 billion shares. Declining issues outnumbered advancers on the NYSE by 1.37-to-1 ratio. On the Nasdaq, decliners outnumbered advancers by 1.72-to-1 ratio. The CBOE VIX increased 4.1% to close at 10.32.

Dow Breaches 23,000

The Dow gained 40.48 points on Tuesday and surpassed the 23,000 psychological milestone in midday trading for the first time. The blue-chip index also hit a fresh intraday record of 23,302.20. This also marked the Dow’s fastest ascent to 1,000-point milestone since the mid of July. In its history spanning over a century, the blue-chip index has registered the fourth 1,000-point increase within a year for the first time — the largest so far.

Economists believe that such a stellar showing by the blue-chip index has partially been due to optimism built around hopes of tax cuts after the new tax code was formulated by President Trump. Gains have also been in part due to a strong corporate earnings and broadly encouraging economic conditions.

Boeing (BA - Free Report) and Caterpillar (CAT - Free Report) have contributed the most toward Dow’s significant 1,000-point ascent since Aug 2 — when blue–chip index surpassed the 22,000 mark for the first time, adding 142 and 121 points, respectively. For the year, the two stocks have rallied 65.9% and 41.2%, respectively, so far. The most recent exuberance of the Dow, however, was supported by shares of Goldman Sachs (GS - Free Report) and Home Depot (HD - Free Report) , which added 87 points and 97 points, respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Strong Earnings Catapults Markets Higher

A slew of strong quarterly earnings set the tone for gains for broader markets. Investors are also observing whether such high stock valuations actually support earnings. Strong earnings from bank and healthcare stocks also contributed significantly toward gains. The S&P 500 advanced 1.72 points to close at a record high. Of the 11 major sectors of the S&P 500, seven ended in the positive territory with healthcare stocks leading the gainers. The Health Care Select Sector SPDR ETF (XLV) gained 1.3% on Tuesday.

Health care stocks were sent higher by gains for Johnson & Johnson (JNJ - Free Report) and UnitedHealth Group Incorporated (UNH - Free Report) , shares of which gained 3.4% and 5.5%, respectively, after the two companies posted earnings beat in the latest quarter.

Johnson & Johnson reported better-than-expected third-quarter 2017 results, beating the Zacks Consensus Estimate for both earnings and sales. The drug and consumer products giant raised its 2017 sales and profit outlook, which sent its shares up 1.5% in pre-market trading.

In fact, this year so far, J&J’s share price is up 18.1%. This is almost in line with the 18.2% increase witnessed by the industry. (Read More)

Meanwhile, UnitedHealth Group Inc. reported third-quarter net operating earnings per share of $2.66, comfortably beating the Zacks Consensus Estimate of $2.57 and increasing 22.6% year over year. Higher revenues, strength in both its segments, UnitedHealthcare and Optum, and membership growth led to the outperformance.

UnitedHealth has a tradition of guiding conservatively and then beating its own estimates to surprise investors. The company surpassed expectations in 25 out of 28 reported quarters and the quarter under review was no exception. (Read More)

Economic Data

Industrial production for the month of September surged 0.3%, surpassing the consensus estimate of an increase of 0.1%. The figure rebounded in September after suffering two consecutive declines earlier. Industrial production was pushed higher by increase in outputs of construction and utilities sectors. Output from the chemical industry was hampered by hurricanes Harvey and Irma, which stunted production in Texas and Florida. This led chemicals lower by 0.3%. Overall, manufacturing production gained 0.1% in September. Meanwhile, capacity utilization increased to 76% from 75.8% in August. 

Stocks That Made Headlines

Canadian Pacific's Q3 Earnings In Line, Revenues Miss

Canadian Pacific Railway Limited (CP - Free Report) reported in-line earnings and lower-than-expected revenues in third-quarter 2017. (Read More)

ExxonMobil Initiates 2 Polyethylene Lines in Mont Belvieu

Oil giant ExxonMobil Corporation’s (XOM - Free Report) petrochemicals unit, ExxonMobil Chemical Company, has brought online two polyethylene lines at its plastics plant in Mont Belvieu, TX. (Read More)

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