US stocks edged further into the red as the Monday session wore on, as output data fuelled expectations of a December rate hike.
Had rosy numbers from Netflix (NASDAQ:NFLX) been available before the closing bell, that might have helped arrest the depressed bourse.
Netflix added many more new customers to its streaming service than expected in the third quarter, sending shares up nearly 20% in after-hours trade on Monday. After ending the session down 1.7% at $99.80, Netflix shares surged 19.9% to $119.65 after hours.
The S&P 500 market bellwether closed down 0.3% at 2126 and led by Southwestern Energy Company (NYSE:SWN), down 3.3% to $12.47 after oil prices sagged, with the West Texas Intermediate down 0.6% to $50.07.
Meanwhile, the S&P Midcap 400 closed down 0.1% at 1518 and led south by Gulfport Energy Corp (NASDAQ:GPOR), down 5.6% to $27.61.
The S&P Smallcap 600 finished down 0.2% at 734, and led by Opus Bank () down 21% to $27.20.
US September industrial production figures, although stable, suggested that the August downturn was just a dip and won’t therefore upset the Fed’s strategy which pundits reckon means a December rate hike.
Even Stanley Fischer, the number two at the Fed who put the cat among the pigeons a month ago when he seemed to infer a rate hike could come sooner rather than later, commented on Monday that interest rates are being depressed by a range of economic factors and may stay low for some time. Fischer cited a series of reasons for the fall in the “equilibrium” interest rate – the federal funds rate that prevails over the longer term when cyclical factors have played out
But that wasn’t enough to abate investor worries about a possible hike coming soon.
Early trading
US stocks were flat on Monday having opened firm and immediately diving into the red as stable industrial production data fuelled expectations of a December rate hike.
The S&P 500 market barometer was flat at 2133. The biggest riser was toys and games maker Hasbro (NASDAQ:HAS) up 7.4% at $81.76 after strong earnings. The biggest faller was Chesapeake Energy Corp (NYSE:CHK), down 2.9% to $6.37, trading technically. It opened bearishly below the pivot of $6.57 today and has reached the first level of support at $6.44. Analysts will be watching for a cross of the next downside pivot targets of $6.32 and $6.07.
But the oil stock also suffered after lawyers Khang & Khang announced a class action lawsuit alleging that since 2015 Chesapeake issued false and misleading statements and failed to disclose it and had improperly accounted for the acquisition and classification of oil and gas properties.
US industrial production rose modestly in September, putting behind it a contraction seen in August.
US industrial production rose 0.1% in September month-on-month, in line with market estimates.
Meanwhile, the dollar is trading at its highest levels since March, amid growing market expectations that a Hillary Clinton victory in the US presidential elections would clear the way for a December rate rise. That said, it wasn’t helping the bourse which reacted negatively to the prospects of more expensive credit to come.
Oil lost impetus and dipped adding to the negative impact on the bourse. The West Texas Intermediate was down 1% at $49.85.
Meanwhile, the S&P Midcap 400 was up 0.2% at 1522 and led by Silgan Holdings (NASDAQ:SLGN) after the containers company announced a share buyback worth $250mln and more to come.
The S&P Smallcap 600 was also up 0.2% at 738 and led by Almost Family Inc (NASDAQ:AFAM) up 8.6% at $39.60.
Pre-Open
US stocks were indicated to open flat to softer on Monday in tandem with losses by Asian and European bourses overnight.
The earlier reaction from markets came after the S&P 500 market bellwether sustained a 1% loss last week and fed through the negative mood on Monday.
Wall Street will be hoping to break the chain early in the session however. The bourse is likely to derive some support from firmer oil prices, with the US benchmark West Texas Intermediate up 0.3% at $50.49.
Plus Bank of America (NYSE:BAC), one of the biggest high street banks, reported third-quarter earnings that beat on both the top and bottom line, the first rise in profit in three quarters helped by strong bond trading revenue.
The bank posted earnings of 41 cents a share on revenue of $21.64bn. Profit of $4.45bn represented a 6.6% gain from a year ago.
Wall Street analysts had expected Bank of America to report earnings of 34 cents a share on revenue of $20.96bn, according to a consensus estimate from Thomson Reuters.
BoA shares were up 1.3% at $16.21 pre-market.
Meanwhile, a further lift came from Hasbro Inc (NASDAQ:HAS), the No. 2 U.S. toymaker, reported a 14.2% rise in quarterly revenue, helped by strong demand for toys in the girls category such as Disney Princess, Frozen and Trolls dolls.
Net income attributable to Hasbro rose to $257.8mln, or $2.03 per share, in the third quarter ended Sept. 25 from $207.6mln, or $1.64 per share, a year earlier. Pre-market it raced 5% higher to $79.91.
Others reporting include United Continental Holdings (NYSE:UAL) which already has landed an average recommendation of “Buy” from the eighteen research firms that are covering the firm in the US, as well as Netflix (NASDAQ:NFLX), which was down 1.1% at $100.37 pre-market.
Tesla Motors (NASDAQ:TSLA) CEO Elon Musk has delayed a new product announcement that was scheduled for Monday.
There are rumours the firm was planning to unveil a reworked version of Tesla's Model X SUV. Now, investors will have to wait until Wednesday for the news.
Musk has already said the news won't have to do with Tesla's controversial merger plan with SolarCity (NASDAQ:SCTY). Tesla was up 0.5% at $197.52 pre-market.