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Sunday Coffee with Eirik: Market Recap 10/30-11/3

The stock market kicked off the new trading week with an uninspiring performance and the major indices took a breather after last weeks record closing session.

The stock market moved nicely higher Tuesday, as traders reacted favorably to the latest batch of corporate profit reports. Mastercard ($MA) shares jumped after results beat the Street’s expectations. Mastercard delivered $3.4 billion vs. $3.28 billion expected in revenue and EPS of $1.34 vs. $1.23 expected.

The major U.S. indexes began Wednesday’s session up sharply, setting all-time intraday highs soon after the opening bell before paring the gains around the midday hour. The recent rally has been emboldened by a strong earnings season and a favorable economic outlook, as a majority of reporting companies continue to deliver in-line or better-than-expected quarterly performance data.

Facebook ($FB) crushed expectations with third-quarter earnings of $1.59 a share, well ahead of estimates of $1.28, while revenue in the quarter jumped 47% from a year earlier to $10.3 billion. The social media giant also warned that its profitability would be affected by ongoing investments in security. Facebook and other tech giants have testified before Congress this week about the role their platforms and services played in Russian interference in the U.S. presidential election.

 

 

Some of the week’s most notable headlines came out of the nation’s capital, including details on the House’s tax reform bill on Thursday. The highlight of the bill is an immediate and permanent reduction in the corporate tax rate from 35.0% to 20.0%. Stocks initially sold off in reaction to the bill but quickly bounced back.

Elsewhere in Washington, President Trump nominated Fed Governor Jerome Powell for the position of Fed Chair. The U.S. central bank reiterated its belief that the economy will continue to expand at a moderate pace and said nothing to alter the market’s expectation for a rate hike in December.

Apple Inc, ($AAPL) reported after the bell on Thursday. The iPhone maker posted better-than-expected fiscal fourth-quarter earnings and upbeat guidance for the coming quarter. A solid forecast tamed any fears that the company might see underwhelming iPhone sales.

 

 

On the company’s conference call following the release of the results on Thursday, CEO Tim Cook said Apple was “bullish’ on the holiday season. “This is going to be the best holiday season yet,” Cook said.

Tesla Inc. ($TSLA) missed earnings estimates and pushed out some of CEO Elon Musk’s ambitious production targets. For the quarter, Tesla posted an adjusted loss of $2.92 a share, substantially wider than the shortfall of $2.31 that analysts had expected. Revenue of $2.98 billion exceeded the consensus call of $2.95 billion.

Traders received a batch of economic news items Friday morning. Foremost, nonfarm payrolls increased by 261,000 in the month of October, coming in weaker than had been anticipated. However, the headline unemployment rate dipped to 4.1%, which was a positive surprise, especially as the labor-force participation rate declined to 62.7%.

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