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MARKET SNAPSHOT: S&P 500, Nasdaq Close Higher, But 3M Drags Dow Lower On Busiest Earnings Day Of Quarter

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10/24/2019 | 04:16pm EST

By Mark DeCambre, MarketWatch , Andrea Riquier

4 Dow components and nearly 10% of the S&P 500 reported earnings Thursday

U.S. stock benchmarks closed mixed Thursday, with the Dow pinned lower by a tumble in shares of 3M, amid a flurry of corporate quarterly results rolling out on Wall Street.

How are major indexes faring?

The Dow Jones Industrial Average closed 28.42 points, or 0.11%, lower, at 26,805.53, with a decline in shares of Post-it maker 3M weighing on the index. The S&P 500 index , meanwhile, gained 5.77 points to 3,010.29, while the Nasdaq Composite Index added 66 points, or 0.81%, at 8,185.80.

What's driving the market?

A quartet of Dow components and 45 of the companies that make up the S&P 500 index reported earnings in what will be the busiest day of the corporate earnings cycle, including Amazon and Visa(V) after the market closed.

The bifurcation in the markets reflects a split in the fortunes of big companies, said, Krishna Memani, vice chairman of investments at Invesco. Investors are weighing commentary from 3M that suggests that "the industrial slowdown is continuing, as opposed to bottoming out," Memani said. In contrast, the companies that power the Nasdaq are "doing quite well," he said.

Doug Cote, chief market strategist at Voya Investment Management, said he remains bullish on the market overall, and said skittish investors haven't been properly paying attention to positive signs in the economy.

"There is way too much pessimism in the market," he said. "The market is focused on the headlines and really ignores the strong fundamentals underneath," he added, referring to healthy gross domestic product in the U.S. and employment figures, in addition to corporate earnings that have come in better than expected.

Of the 168 S&P 500 companies that have reported third-quarter results thus far, 80.4% of them have come in above analysts' consensus estimates and 13.1% have fallen below estimates. By comparison, on average 65% of companies beat estimates and 20% miss, going back to 1994, according to data from Refinitiv.

U.S. economic reports, however, were mixed on Thursday, with durable-goods orders dropping 1.1% last month, the government said Thursday (http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf#EconStats). Economists surveyed by MarketWatch had forecast a 0.8% decline. The decline over the past 12 months steepened to 5.4%, marking the biggest yearly drop-off since the middle of 2016. And sales of newly constructed homes in the U.S. decreased 0.7% on a monthly basis in September to a seasonally-adjusted annual rate of 701,000, the government reported Wednesday.

Meanwhile, U.S. initial jobless claims , a rough way to measure layoffs, fell by 6,000 to 212,000 in the seven days ended Oct. 19, holding near a 50-year low.

Overseas, European Central Bank President Mario Draghi delivered the final policy meeting of his tenure. His successor Christine Lagarde, the former International Monetary Fund chief, was in attendance at the policy meeting, Draghi confirmed at a news conference.

Read:Draghi saved the euro, but leaves ECB at crossroads (https://www.wsj.com/articles/mario-draghi-saved-the-euro-leaves-ecb-at-crossroads-11571907592?mod=searchresults&page=1&pos=2)

Draghi leaves Lagarde a fractious ECB that saw divisions over monetary easing measures embarked upon last month, including a recent spate of bond buying. The ECB left its main deposit facility rate at negative 0.5% and its main lending rate at 0%. The rate-setting Governing Council repeated that it expects to keep rates at "present or lower levels" until inflation, which has remained stubbornly low, "robustly" converges with its target of near but just below 2%. It also reiterated that it will begin a controversial bond-buying program at a pace of EUR20 billion a month beginning in November.

The ECB meeting comes ahead of the Federal Reserve's two-day Oct. 29-30 policy meeting, where market participants are widely expecting a third consecutive interest rate cut of 25 basis points, as the central bank attempts to avert a slowdown that has gripped much of the developed world.

Outside of the U.S., the German economy, the largest in the European Union, is continuing to struggle, new data released Thursday show, with the difficulties of its export-oriented base extending to the service sector as global trade dries up.

The IHS Markit flash German manufacturing PMI inched up to 41.9 in October from September's decade-worst 41.7, which is still a reading that shows the factory segment of the country's economy in dire straits. Readings below 50 indicate contraction.

Which stocks are in focus?

Tesla surged more than 17% after the electric-car maker surprised investors by reporting a profit for the third quarter, allaying investors' fears that it was prioritizing growth and production over profit.

Opinion:Tesla is profitable again. How long will it last this time? (Tesla%20reports%20surprise%20profit,%20just%20like%20it%20did%20a%20year%20ago%20before%20a%20series%20of%20missteps%20pushed%20electric-car%20maker%20off%20track)

Check out: Tesla bull praises 'Picasso-like' quarter, but others question whether profit can be sustained

Microsoft reported fiscal first-quarter profit of $10.7 billion, or $1.38 a share, on revenue of $33.1 billion, up from $1.14 a share on sales of $29.08 billion a year ago. Analysts on average expected earnings of $1.25 a share on revenue of $32.15 billion, according to FactSet. Shares of the technology giant were nearly 2% higher.

3M said quarterly sales fell to $7.99 billion in its latest quarter from $8.15 billion a year earlier. Analysts had expected $8.17 billion of revenue in the quarter, according to FactSet. Shares were down 4.1%. The company also cut its full year earnings forecast.

Ford Motor Co.(F) tumbled more than 6% after the car maker lowered its full-year target , sparking worries that a broad restructuring at the company isn't succeeding in driving earnings growth.

Twitter shares plunged 21% after the social-media company fell short on its third-quarter financial metrics despite delivering better user growth than expected.

PayPal Holdings rose 8.6% after the payments company posted better-than-expected results in its latest quarter with a 19% rise in revenues

Materials science company Dowsaid third-quarter net profit dropped to $333 million, or 45 cents a share, from $1.01 billion, or $1.36 a share. Sales fell 15% to $10.76 billion, on lower prices as global energy prices fell. Company shares gained 4.8%.

Ebay dropped 9.1% after the online marketplace forecast its first quarterly revenue decline in four years.

Visteon Corp. shares (VC)rallied 8.5% Thursday , after the maker of plane and car parts blew past estimates for the third quarter.

Baxter International shares sank 10% after the Deerfield, Ill., seller of dialysis products and generic pharmaceutical drugs disclosed errors in its financial statements related to foreign-currency transactions, which may force the company to restate results.

Raytheon, which is preparing to combine with United Technologies, said Thursday it had net income of $860 million, or $3.08 a share, in the third quarter, up from $644 million, or $2.25 a share, in the year-earlier period. EPS from continuing operations also came to $3.08, ahead of the $2.86 FactSet consensus for the aerospace and defense contractor. Raytheon shares gained 3.9%.

How are other markets performing?

The 10-year Treasury note yield was 3 basis points higher at 1.77% on Thursday.

On the oil front, December West Texas Intermediate crude was modestly higher at $56.21 a barrel on the New York Mercantile Exchange, up 0.4%, marking a second day of gains.

Gold for December delivery on Comex gained 0.6% at $1,505.20 an ounce on Comex after rising 0.6% on Wednesday.

The ICE U.S. Dollar Index , which tracks the performance of the greenback against six major rivals, gained 0.2% at 97.67.

Elsewhere, the Stoxx Europe 600 closed 0.6% higher, at 397.37.

(MORE TO FOLLOW) Dow Jones Newswires

10-24-19 1615ET

Stocks mentioned in the article
ChangeLast1st jan.
3M COMPANY -5.72% 165.58 Delayed Quote.-6.14%
AMAZON.COM 1.36% 1853.25 Delayed Quote.0.29%
BAXTER INTERNATIONAL INC. 0.02% 90.55 Delayed Quote.8.29%
DJ INDUSTRIAL 0.66% 28722.85 Delayed Quote.0.65%
DOW INC 0.00%End-of-day quote.0.00%
EBAY INC. 2.06% 36.21 Delayed Quote.0.28%
EURO / US DOLLAR (EUR/USD) -0.20% 1.10006 Delayed Quote.-1.73%
FORD MOTOR COMPANY 0.90% 8.97 Delayed Quote.-3.55%
IHS MARKIT LTD 0.86% 80.05 Delayed Quote.6.24%
INVESCO LTD. 1.53% 17.97 Delayed Quote.-0.06%
LONDON BRENT OIL -0.13% 59.92 Delayed Quote.-10.55%
MICROSOFT CORPORATION 1.96% 165.46 Delayed Quote.4.92%
NASDAQ 100 1.55% 9090.932471 Delayed Quote.4.68%
NASDAQ COMP. 1.43% 9269.680958 Delayed Quote.3.82%
PAYPAL HOLDINGS 1.11% 116.52 Delayed Quote.7.72%
RAYTHEON -0.37% 227.62 Delayed Quote.3.97%
S&P 500 1.01% 3276.24 Delayed Quote.1.41%
STOXX EUROPE 600 0.45% 419.54 Delayed Quote.1.88%
STOXX EUROPE 600 NR 0.45% 905.96 Delayed Quote.1.93%
TESLA INC. 1.59% 566.9 Delayed Quote.35.52%
TWITTER 1.95% 33.42 Delayed Quote.4.27%
UNITED TECHNOLOGIES CORPORATION 1.21% 152.86 Delayed Quote.2.07%
US DOLLAR INDEX 0.06% 98.02 End-of-day quote.1.26%
VISA 0.58% 202.85 Delayed Quote.7.96%
VISTEON CORPORATION 4.66% 86.43 Delayed Quote.-0.18%
WTI 0.13% 53.8 Delayed Quote.-14.28%
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