Daily Market Report October 3rd, 2024
After two lower days to start the fourth-quarter, the market narrowly reversed direction yesterday to end a little higher, and Treasury yields rose following an encouraging update on the job market’s strength.
The Dow finished 39 points higher to 42,196 led by gains in CRM and UNH of the larger variety in addition to AXP and HD. The S&P rose by 1 to 5709 with some technology advances such as NVDA and those ongoing Chinese stock advances. The Nasdaq rose by 15 to 17,925 on NVDA, ADBE, AVGO and the Chinese issues like BIDU while the Russell 2000 ended 2 points lower to 2195. And the VIX actually ended down to 18.90 despite all of the Middle Eastern hand-wringing.
Oil prices rose again as the world waits to see how Israel will respond to Tuesday’s missile attack from Iran, but they pared their gains as the day progressed. After briefly topping $76 earlier, the price for a barrel of Brent crude settled at $73.90, up 0.5%.
While Israel is not a major producer of oil, Iran is, and a worry is that a broadening war could affect neighboring countries that are also integral to the flow of crude. Helping to keep oil prices in check, meanwhile, are signals that supplies remain ample at the moment. The amount of crude in U.S. inventories increased last week, according to a U.S. government report.
In the bond market, Treasury yields rose after a report indicated hiring by U.S. employers outside the government may have been stronger last month than expected.
A report from ADP Research said private-sector employers accelerated their hiring in September to around 250,000. This would be an encouraging jobs report number on Friday, but their predictions are usually so off that an encouraging signal for the more comprehensive report on the U.S. job market due to arrive Friday from the U.S. government.
The dominant question hanging over the market has been whether the job market can keep holding up after the Federal Reserve earlier kept interest rates at a two-decade high. The Fed was trying to push hard to try to contain higher inflation.
Stocks are near records in large part on the belief that the U.S. economy will indeed continue to grow, now that the Federal Reserve has shifted to cutting interest rates. The Fed last month lowered its main interest rate for the first time in more than four years and indicated more cuts will arrive through next year.
The yield on the 10-year Treasury rose to 3.78% from 3.73% late Tuesday. The two-year yield, which more closely follows expectations for what the Fed will do with overnight interest rates, rose to 3.63% from 3.61%.
Traders are ratcheting back their expectations for how much the Fed will cut rates by at its next meeting in November, as they are now mostly betting on a traditional-sized cut of a quarter of a percentage point, according to data from CME Group.
CEZ jumped 5% for the biggest gain in the S&P. The casino owner said it approved a new program to deliver up to $500 million to shareholders by buying back more of its stock.
CIEN climbed 7% after the networking company announced its own program to buy back up to $1 billion of its stock.
They helped offset an 11.8% tumble for HUM after the insurer warned a drop in its quality ratings for Medicare Advantage could mean a hit to its revenue in 2026. Humana said it believes there may be errors in the Centers for Medicare and Medicaid Services’ calculations, and it is trying to challenge the ratings.
Dow component NKE sank 7% even though the athletic giant reported stronger profit for the latest quarter than analysts expected. Its revenue fell short of forecasts, and the slump shows that even though the athletic giant reported stronger profit for the latest quarter than analysts expected. Its revenue was weaker than predictions, and the slump shows how much work incoming CEO Elliott Hill has in making the brand cool among customers. The company also pulled its forecast for full-year financial results and postponed its investors day conference.
CAG fell by 8% after the company behind Duncan Hines and Reddi-wip reported weaker profit than analysts expected. It said temporary manufacturing disruptions at its Hebrew National business during prime grilling season hurt its results.
TSLA sank despite reporting a gain in deliveries of electric vehicles during the latest quarter, the first time that has happened this year. The number topped analysts’ forecasts, but investors may have been expecting an even bigger increase.
The following reacted to earnings reports: today – LEVI lower and STZ higher.
Economic reports showed the following: today – weekly jobless claims came in at 225,000; tomorrow – the big one, which is the September jobs report for which the estimate is around 150,000 and the unemployment numbers are expected to be 4.2%.
By Don Selkin