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Nasdaq Composite closes on new high despite stocks easing back in the afternoon session

The Nasdaq rose 14 points on the day to close at a record closing level of 6,606.
Nasdaq
It is the 57th time this year the Nasdaq has closed at a new high
  • Dow Jones up 53 at 22,894

  • S&P 500 up 6 at 2,557

  • Nasdaq Composite up 14 at 6,606

  • BofA cuts the mustard but Wells Fargo disappoints again

  • HP Inc wanted in early deals after raising guidance

Stocks surrendered some of their earlier gains in the afternoon session, but at least the Nasdaq Composite finished on a closing high.

The Nasdaq rose 14 points on the day to close at a record closing level of 6,606.

The Dow Jones closed at 22,872, up 31 points, and the S&P 500 finished 2 points higher at 2,553.

Geopolitical concerns were in place, with President Trump saying he would not certify Iran's compliance with a 2015 nuclear agreement, and set out a new strategy in its diplomatic relations with the country.

Lunchtime: Stocks head back towards intra-day highs

Shares edged back towards their intra-day highs over the lunchtime trading session.

The Dow Jones was up 53 at 22,894 while the S&P 500 was 6 points to the good at 2,557.

Banking results season is in full swing and today's crop was a mixed bag.

“Wells Fargo, still wrestling with fallout from a fake accounts scandal saw a much older conduct issue come back to bite in the third quarter leaving it with the most disappointing results among rivals so far,” observed Ken Odeluga, a market analyst at spread-betting firm City Index.

“Shares in the world’s second largest bank by market value were also dragged by the fourth consecutive quarterly slump in its dominant mortgage business.

“Wells’s earnings contrasted markedly with close rival in residential property, Bank of America, where profits rose 15%.

“BofA posted an increasingly successful cost-control campaign, and a loan book that increased 6% hand in hand with toughening margins. How the pair fared corroborates our view that theoretically improving US banking conditions won’t lift all boats immediately, particularly as the third quarter is turning more variable than investors anticipated,” he added.

Away from the banking sector, Remark Holdings Inc (NASDAQ:MARK) shot up 20% to US$3.53 after its 3D augmented reality technology would be used in the launch of social media company Sina Weibo's first augmented-reality-enabled mobile application.

Open: Stocks off to a flying start

Stocks got off to a flying start, helped by a an uplifting consumer sentiment report.

The University of Michigan's consumer sentiment index rose to a 13-year high of 110.1 in October from 95.1, well ahead of economist's expectations of 95.

The Dow Jones average was up 57 (0.3%) at 22,900, while the S&P 500 was up 5.6 at 2,557.

Market sentiment was also boosted by the suggestion that the central bank might not be so quick to rise interest rates after all following today's inflation data (see below).

“Just when Janet Yellen had one finger on the trigger to raise rates in December, weaker Inflation figures have reared their ugly head once again,” observed Alex Lydall, head of Dealing at Foenix Partners.

“Time after time in recent FOMC meetings, members have cited Inflation trajectory as the stand-out concern, and today has reinforced their predictions. With growth and the domestic economy booming, wages recently increasing, Fed officials appeared hawkish running into year-end, and understandably so.

“This slip in Inflation will likely fuel the dovish members, but in the grand scheme will unlikely derail rate decisions – perhaps a mere speed bump in the road to economic recovery,” he added.

On the corporate front, tiddler PhaseRx Inc (NASDAQ:PZRX) shot up 45% to US$1.28 after announcing a corporate restructuring and a review of strategic alternatives – code for putting itself up for sale.

Further up the corporate ladder, PC manufacturer HP Inc (NYSE:HP) was up 5.6% at US$21.55 after raising earnings guidance for fiscal 2018.

The company expects earnings per share will be somewhere between US$1.74 and US$1.84. The consensus forecast among analysts was US$1.75.


 

Pre-market

Banking results season is in full flow and while Bank of America Corp (NYSE:BAC) passed muster this morning, Wells Fargo & Co (NYSE:WFC) did not.

Bank of America (BoA) reported a rise in third quarter profit to US$5.59bn from US$4.96bn the year before.

Earnings per share of 48 cents were three cents higher than analysts had expected.

Revenue also topped expectations, rising from US$21.86bn a year earlier to US$22.08bn, versus expectations of US$21.98bn.

The shares edged up 0.3% to US$25.45 in pre-market trading.

In contrast, serial disappointer Wells Fargo saw its shares fall 2.4% to US$53.89 after it reported lower-than-expected revenue of US$21.9bn; this was down 2% year-on-year and lower than the consensus estimate of US$22.4bn.

Earnings per share of 84 cents were 20 cents lower than they otherwise would have been as a result of one-off litigation costs. Analysts had penciled in a figure of US$1.02 a share for earnings.

PNC Financial Services Group Inc (NYSE:PNC) edged lower in screen-based trading, despite revealing third quarter net income rose to US$1.11bn from US$988mln the year before.

Earnings per share of US$2.16 were three cents higher than the consensus Wall Street estimate.

The shares were down 7 cents at US$135.20.

Netflix Inc (NASDAQ:NFLX) hardened 1.6% to US$199 JP Morgan hiked its price target from US$210 to US$225 ahead of the media streaming pioneer's results next week.

In macro-economic news, US retail sales rose 1.6% in September, driven – if you will forgive the pun – by purchases of new cars and trucks.

“Hurricane effects are clearly visible – higher gasoline prices boosted gasoline station sales 5.8% MoM [month-on-month] while the fact unit car sales rose to a 12 year high helped boost the value of sales with a 3.6%MoM rise,” said James Knightley, chief international economist at ING.

“Strength can also be seen in other components and it is likely that there was some uplift as households start to replace lost items following the recent hurricanes. This has come on top of what is already a strong story for the consumer with employment, wages and confidence all looking healthy,” he added.

Meanwhile, consumer prices rose 0.5% month-on-month, pushing the annual inflation rate up to 2.2%, versus expectations of 2.3%.


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