The health-care, materials and utilities sectors led gainers
U.S. stocks closed higher on Tuesday, 18 October 2016 as investors welcomed stronger-than-expected quarterly results from a roster of companies, including Goldman Sachs Group, United Health Group and Netflix Inc. A positive bias in global markets and some mixed inflation data also contributed to today's upbeat demeanor. Meanwhile, reports on inflation and home-builder confidence that were in line with forecasts underlined market expectations that the Federal Reserve is likely to raise interest rates in December.
The Dow Jones Industrial Average rose 75.54 points, or 0.4%, to close at 18,161.94, with gains capped by a selloff in IBM. The Nasdaq Composite Index added 44.01 points, or 0.9%, to close at 5,243.84, boosted by sharp gains in biotechnology stocks. The S&P 500 index finished up 13.10 points, or 0.6%, at 2,139.60, with all 11 main sectors trading higher. The health-care, materials and utilities sectors led gainers.
The third-quarter earnings reporting season picked up in earnest this morning as participants pored over reports from the likes of Netflix, UnitedHealth, Goldman Sachs, IBM and Johnson & Johnson. All five names topped bottom-line estimates for the quarter, but the results were met with mixed reactions.
European markets outperformed on the heels of an above-consensus inflation reading out of the UK. All eleven S&P 500 sectors finished in the green with health care, materials, utilities, financials and technology leading the pack.
IBM shares closed down 2.6% after the company posted a drop in profit and revenue late Monday. Meanwhile, shares of Netflix surged, closing up 19% after results blew past Wall Street expectations.
Today's economic data included the CPI Report for September and the NAHB Housing Market Index for October. The all items index was up 0.3% in September, which was in-line with expectations, while the all items index, excluding food and energy, was up 0.1% (consensus +0.2%).
Separately, the NAHB Housing Market Index for October came in at 63 (consensus 59.0) from an unrevised 65 in September.
Precious metals ended substantially higher at Comex on Tuesday, 18 October 2016. Gold futures on Tuesday book its highest settlement level in nearly two weeks, as strength in the British pound helped the U.S. dollar ease back from recent multimonth highs. Signs of a pickup in inflation, which tends to be supportive for gold, also gave the metal a lift.
December gold rose $6.30, or 0.5%, to settle at $1,262.90 an ounce. December silver put up the bigger move, adding 16.5 cents, or 0.9%, to $17.638.
Gold gained as the dollar pulled back from recent highs. The ICE U.S. Dollar Index which measures the buck against a basket of six currencies, traded nearly flat as of gold's settlement, after touching seven-month highs on Monday. A stronger greenback can put pressure on dollar-denominated gold and vice versa.
Crude oil futures settled higher on Tuesday, 18 October 2016 at Nymex with prices in New York reclaiming the $50-a-barrel level after posting losses over the past two trading sessions. The Organization of the Petroleum Exporting Countries' Secretary-General Mohammad Barkindo voiced the group's commitment on Tuesday to limit crude production, but concerns that a recent rise in oil prices, which logged gains for the last four weeks in a row, will spur more U.S. shale production kept a lid on oil's price gains.
November West Texas Intermediate crude added 35 cents, or 0.7%, to settle at $50.29 a barrel on the New York Mercantile Exchange, rebounding an intraday low of $49.76. December Brent crude on London's ICE Futures exchange rose 16 cents, or 0.3%, to $51.68 a barrel.
Treasuries finished on a higher note as yields pulled back across the curve. The yield on the 2-yr note declined one basis point to 0.81% while the yield on the benchmark 10-yr note settled lower by two basis points (1.74%).
Today's trading volume fell below the average of 858 million as 742 million shares changed hands at the NYSE floor.
Tomorrow's economic data will include the 7:00 ET release of the the weekly MBA Mortgage Index. Separably, Housing Starts (consensus 1168k) and Building Permits (consensus 1164k) for September will each cross the wires at 8:30 ET. The day's data will be capped off with the release of the Fed's Beige Book for October at 14:00 ET.
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