Major U.S. market indexes moved moderately north on Thursday, owing to a newly proposed Brexit deal and impressive third-quarter earnings results. Top American companies such as Morgan Stanley, Netflix and Honeywell International Inc. posted remarkably good results.
The three major indexes— the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite — finished in the green on Oct 17. Dow Jones ended at 27,025.88 after adding 0.1%, the S&P 500 finished at 2,997.95 after gaining 0.3% and the tech-laden Nasdaq Composite closed at 8,156.85 after rising 0.4%.
The fear-gauge CBOE Volatility Index (VIX) gained 3.2% to close at 14.12 on Thursday. Finally, advancers outnumbered decliners on the NYSE by a 2.31-to-1 ratio.
New Brexit Deal Reached by UK and EU
The United Kingdom and European Union reached a newly proposed Brexit deal which could put an end to the uncertainty surrounding Britain’s exit from the EU. The proposal has yet to be passed by the UK Parliament.
European Commission President Jean-Claude Juncker tweeted just hours before Brussels hosted an EU summit that a “fair and balanced agreement for the EU and the UK” had been reached.
British Prime Minister Boris Johnson also tweeted that a “great new deal” had been struck and encouraged UK leaders to give a formal nod to it in a special session that will be held on Oct 19. A successful Brexit deal would definitely boost strained trade relations and eliminate fears of a slowdown in global growth.
Stellar Q3 Earnings Keep Coming In
In addition to investor optimism around a possible Brexit deal, upbeat Q3 earnings from top companies also provided the much-needed boost to Wall Street.
Morgan Stanley’s (MS - Free Report) Q3 adjusted earnings of $1.21 per share surpassed the Zacks Consensus Estimate of $1.10 per share. The bank reported net revenues of $10.03 billion, which witnessed a 2% rise from Q3 2018. Plus, it also beat the Zacks Consensus Estimate of $9.68 billion.
Morgan Stanley called the quarter ended September 2019 its best third quarter for revenues in a decade. The bank witnessed solid increase in trading and investment banking revenues. Morgan Stanley’s bond-trading desks posted $1.43 billion in third-quarter revenues, which were above expectations. The bank’s wealth management segment generated $4.36 billion in revenues.
Further, Morgan Stanley’s advisory fees increased 8% and underwriting income added 4%. An increase in loan balance also drove net interest income higher, which supported the bank’s top line. (Read more)
Streaming giant Netflix (NFLX - Free Report) reported Q3 2019 earnings of $1.47 per share that surpassd the Zacks Consensus Estimate by 42 cents. Revenues of $5.245 billion rose 31.1% on an annualized basis as well.
The company added 6.8 million paid subscribers, which is a 15.3% jump from last year’s figures. In addition, the rise in the number of paid subscribers in Q3 quarter was much greater than 2.7 million the company had added in Q2. (Read more)
Both Morgan Stanley and Netflix carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Honeywell International (HON - Free Report) reported mixed third-quarter 2019 results with earnings beating Zacks Consensus Estimate but revenues lagging behind. The company’s adjusted earnings were reported $2.08 per share, which outpaced the Zacks Consensus Estimate of $2.01. Honeywell’s revenues of $9,086 million, however, missed the Zacks Consensus Estimate of $9,155 million.
Strong demand for commercial fire products, strength in Honeywell’s aerospace business and overall growth in process solutions business drove the company’s revenues higher in Q3. (Read more)
According to a report by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, privately???owned housing completions in September fell about 9.7% below August’s revised estimate of 1,262,000 and settled at 1,139,000. The number of housing starts also fell 9.4% last month to reach a seasonally adjusted annual rate of 1,256,000.
In other economic news, industrial production declined 0.4% in September after rising 0.8% in August. In the quarter ended September, industrial production increased at an annualized rate of 1.2% after sliding about 2% in the previous two quarters.
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