Stocks Trade in Red Shade as Success for Tax Proposal Weighed

Charles Schwab: On the Market

Posted: 11/17/2017 4:15 PM EST

Stocks Trade in Red Shade as Success for Tax Proposal Weighed

 

U.S. stocks finished the trading session lower and the week mixed as investors appeared to exercise caution amid the developing path of proposed tax policy, some disappointing Chinese economic data and a flattening yield curve. Treasury yields were mixed and the U.S. dollar was lower, while crude oil prices rebounded from a recent decline and gold was also higher. Shares of GAP, Abercrombie & Fitch, and Foot Locker traded solidly higher following the release of the companies Q3 earnings results. 

The Dow Jones Industrial Average (DJIA) declined 100 points (0.4%) to 23,358, the S&P 500 Index declined 7 points (0.3%) at 2,579, and the Nasdaq Composite slipped 11 points (0.2%) to 6,783. In moderate volume, 875 million shares were traded on the NYSE and 2.0 billion shares changed hands on the Nasdaq. WTI crude oil rallied $1.36 to $56.71 per barrel and wholesale gasoline was $0.03 higher at $1.74 per gallon. Elsewhere, the Bloomberg gold spot price gained $15.46 to $1,294.04 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—declined 0.3% to 93.63. Markets were mixed for the week, as the DJIA decreased 0.3% and S&P 500 Index ticked 0.1% lower, while the Nasdaq Composite advanced 0.5%.

Gap Inc. (GPS $29) reported Q3 earnings-per-share (EPS) of $0.58, versus the $0.54 FactSet estimate, as revenues rose 1.1% year-over-year (y/y) to $3.8 billion, roughly in line with forecasts. Q3 same-store sales grew 3.0% y/y, above the expected 1.3% gain. GPS raised its full-year guidance. Shares finished nicely higher.

Applied Materials Inc. (AMAT $56) posted fiscal Q4 EPS of $0.91, or $0.93 ex-items, compared to the forecasted $0.91, with revenues rising 20.0% y/y to $4.0 billion, above the estimated $3.9 billion. The chip equipment maker issued Q1 guidance that exceeded projections. AMAT traded lower.

Abercrombie & Fitch Co. (ANF $16) announced Q3 earnings of $0.15 per share, or $0.30 ex-items, topping the forecasted $0.22, as revenues increased 5.0% y/y to $859 million, north of the estimated $820 million. Q3 same-store sales rose 4.0% y/y, above the expected 0.4% gain. Shares rallied as ANF also issued a Q4 outlook that bested the Street's expectations.

Williams-Sonoma Inc. (WSM $46) reported Q3 EPS of $0.84, matching forecasts, as revenues rose 4.3% y/y to $1.3 billion, rough in line with expectations. Q3 same-store sales grew 3.3% y/y, just above the estimated 3.0% increase. WSM issued Q4 profit guidance that missed expectations. Separately, the company announced the acquisition of home furnishings and décor industry 3-D imaging and augmented reality platform Outward Inc. WSM traded solidly lower.

Foot Locker Inc. (FL $41) posted Q3 profits of $0.81 per share, or $0.87 ex-items, versus the expected $0.80, as revenues decreased 0.8% y/y to $1.9 billion, topping the forecasted $1.8 billion. Q3 same-store sales declined 3.7% y/y, compared to the projected 4.6% drop. FL said despite a continued highly promotional environment, it believes it can exceed its Q4 guidance issued in August. Shares surged nearly 30%.

Housing construction activity stronger than expected

Housing starts (chart) for October jumped 13.7% month-over-month (m/m) to an annual pace of 1,290,000 units, well above the Bloomberg forecast of a 1,190,000 unit rate. September starts were upwardly revised to an annual pace of 1,135,000. Building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future construction, grew 5.9% m/m in October to an annual rate of 1,297,000, after September's favorably revised 1,225,000 rate, and north of the expected annual pace of 1,250,000 units.

The Kansas City Fed Manufacturing Activity Index for November showed growth decelerated more than expected, with the index dipping to 16 from 23 in October, compared to the forecasted 21, though a reading above zero denotes expansion in activity.

Treasuries finished mixed, with the yield on the 2-year note ticking 1 basis point (bp) higher to 1.72%, while the yield on the 10-year note declined 3 bps to 2.35%, and the 30-year bond dropped 5 bps to 2.78%.

The markets continued to grapple with the ongoing flattening of the yield curve and the recent soft data out of China that came amid a relatively positive global economic backdrop. Also, U.S. tax reform uncertainty remained as yesterday's bill passing in the House opened the door for scrutiny and concerns about the reconciliation process with the Senate's plan that differs significantly on some key areas and is expected to be voted on the week after the Thanksgiving holiday. As such, check out our article, Does Low Market Volatility Portend a Market Tumble?, as well as Schwab's Vice President of Legislative and Regulatory Affairs, Michael T. Townsend's latest commentary, Tax Reform: Key Differences Between the Senate and House Plans.

Europe mostly lower and Asia mixed to close out the week 

European equity markets traded mostly lower after breaking a string of losses yesterday that came amid what seemed to be a flare-up in global market risk aversion. With U.S. tax reform uncertainty lingering despite yesterday's House bill passing, coalition talks in Germany ramped up and the Brexit stalemate remained. For analysis of the uncertainty political front in the region, see Schwab's Chief Global Investment Strategist Jeffrey Kleintop's, CFA, and Vice President of Trading and Derivatives Randy Frederick's video, Political Risk: How Should Investors Respond?. The British pound and the euro ticked slightly higher versus the U.S. dollar as the markets continued to digest comments from European Central Bank President Mario Draghi, who offered an upbeat outlook for the economy, but said the central bank needs to be patient in normalizing policy as inflation remains subdued. Schwab's Jeffrey Kleintop provides analysis of the changing global monetary policy landscape in his article, How the Shift by Central Banks May Affect the Stock Market. Bond yields in the region were mostly lower, while energy issues recovered modestly as crude oil prices rebounded after a recent drop.

Stocks in Asia finished mixed to close out a week that saw some increased downside pressure as the global markets appeared to shift to a de-risking mood on the heels of a global rally. Schwab's Jeffrey Kleintop, CFA, offers a look at the global market rally seen this year that has been fostered by the broadest economic growth in a decade in his latest article, 5 Reasons Investors Should Give Thanks. Some support came from yesterday's rebounds in the U.S. and Europe, but the markets continued to be cautious as U.S. tax reform uncertainty lingered, crude oil prices sold off, and recent Chinese economic data has disappointed. Japanese equities pared solid early gains as the yen gained ground late in the day. Mainland Chinese shares declined with sentiment being exacerbated by local media reports warning of high valuations in some stocks that have rallied as of late, per Bloomberg. Equities trading in Hong Kong and India advanced, while Australian securities were also higher and South Korean shares finished flat.

Stocks bounce back to finish week mixed

U.S. stocks finished the trading week mixed as a strong rally on Thursday, led by tech issues, was able to offset losses that developed early in the week as the uncertainty surrounding the likelihood of a successful domestic tax policy overhaul intensified. The House passed its bill to reduce taxes and focus is now tuned to the Senate and its legislative process with a floor vote expected shortly after the Thanksgiving holiday break. Economic data was mostly positive as an advance read on retail sales unexpectedly increased m/m, showing widespread sales gains, but also revealing a dip in online shopping. A separate report showed small business optimism rose and consumer inflation was mostly in line with expectations. Market participants were also treated to hotter-than-expected producer price inflation figures, slowing in some regional manufacturing output and an unexpected rise in weekly jobless claims.

In earnings news, Wal-Mart Stores (WMT $97) surged to a record high after it revealed its Q3 results, while Home Depot (HD $167), Tyson Foods (TSN $78), and Dick's Sporting Goods (DKS $29) also topped analysts' quarterly projections. Target (TGT $57) disappointed with its quarterly marks and General Electric (GE $18) cut its quarterly dividend in half. As noted in the latest Schwab Market Perspective: Incredible, Amazing…Unstop-a-bull?, third quarter earnings season is largely complete and can be characterized as a positive one—with strong “beat rates” for both top- and bottom-line results; while economic data continues to indicate solid growth.

Although next week will be shortened by Thursday's Thanksgiving holiday, during which the U.S. markets will be closed, the economic calendar will still deliver a feast of key reports that could provide sustenance for market action. Housing will remain in focus, with the release of existing home sales, along with manufacturing demand in the form of the preliminary durable goods report. The Leading Index will give us a look at how many cylinders the economy is firing on, while the minutes from the Fed's Oct/Nov monetary policy meeting will provide us discussion details as the highly-expected December rate hike decision looms. We will get a look at the psyche of the consumer, courtesy of the final University of Michigan Consumer Sentiment Index for this month. The week will come to a close with Markit's November business activity reports, illustrating the pace of growth in output from the manufacturing and services sectors.

Schwab's Director of Market and Sector Analysis, Brad Sorensen, CFA, notes in his latest, Schwab Sector Views: 'Tis the Season…Almost, much of the U.S. economy arguably comes down to how the consumer is faring as businesses make hiring and investing decisions based on their expectations of consumer demand. Brad adds that it would be difficult to view the status of the consumer as anything less than mostly positive with unemployment historically low, wages trending higher and still low interest rates conspiring to boost consumer confidence.

International reports due out next week that deserve a mention include: Australia—Leading Index. Japan—trade balance and the All Industry Activity Index. Eurozone—Markit Manufacturing and Service PMIs and consumer confidence, along with German Q3 GDP and PPI. U.K.—public sector net borrowing, Q3 GDP and business investment.

Gains Taper Near Close

Charles Schwab: On the Market

Posted: 10/26/2017 4:15 PM EDT

Gains Taper Near Close

 

After being higher for most of the day, the U.S. stock markets finished mixed, with gains in the tech sector on Twitter's quarterly results being tempered by health care issues following a disappointing outlook from Celgene. Treasury yields were higher amid mixed economic data, including a disappointing pending home sales report, while the U.S. dollar rallied with the euro seeing pressure in the wake of the European Central Bank's decision to cut and extend its stimulus measures. Crude oil prices were higher and gold was lower.

The Dow Jones Industrial Average (DJIA) rose 72 points (0.3%) to 23,401, the S&P 500 Index increased 3 points (0.1%) to 2,560, while the Nasdaq Composite was 7 points (0.1%) lower at 6,557. In moderate volume, 875 million shares were traded on the NYSE and 2.1 billion shares changed hands on the Nasdaq. WTI crude oil added $0.46 to $52.64 per barrel and wholesale gasoline gained $0.01 to $1.70 per gallon. Elsewhere, the Bloomberg gold spot price lost $11.30 to $1,266.23 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 1.1% higher at 94.70.

Twitter Inc. (TWTR $20) reported a Q3 net loss of $0.03 per share, or earnings-per-share (EPS) of $0.10 ex-items, versus the $0.06 FactSet estimate, as revenues declined 4.0% year-over-year (y/y) to $590 million, above the projected $587 million. The company said daily active users grew 14.0% y/y and monthly active users rose 4.0%. TWTR issued Q4 operating earnings guidance that topped forecasts. Shares rallied.

Comcast Corp. (CMCSA $36) posted Q3 earnings of $0.55 per share, or $0.52 ex-items, versus the projected $0.49, with revenues declining 1.6% y/y to $21.0 billion, compared to the forecasted $21.1 billion. CMCSA's video subscribers fell but by a slightly smaller amount than expected. The company said it increased operating earnings despite the impact of the severe storms and the uneven comparison due to the Rio Olympics. Shares finished lower.

Ford Motor Co. (F $12) announced Q3 EPS of $0.39, or $0.43 ex-items, compared to the expected $0.33, as automotive revenues rose 0.9% y/y to $33.6 billion, above the forecasted $33.0 billion. F raised the low end of its full-year EPS outlook. Shares were higher.

United Parcel Service Inc. (UPS $119) reported Q3 EPS of $1.45, in line with forecasts, as revenues grew 7.0% y/y to $16.0 billion, above the expected $15.6 billion. The company cited the impact of natural disasters, but said it saw balanced shipment growth and yield expansion, while its international profit rose solidly. UPS raised the low end of its full-year earnings outlook. Shares were higher.

Shares of Celgene Corp. (CELG $100) tumbled after the company lowered its 2017 revenue outlook and its long-term guidance for 2020, due to certain market dynamics and recent pipeline events. The updated guidance accompanied its Q3 earnings report, which showed revenues were softer than expected as sales of its psoriasis drug Otezla severely missed estimates. This also comes as the company announced last week that its highly-anticipated drug for Crohn's disease failed a late-stage trial.

In late-day action, the Wall Street Journal reported that CVS Health Corp. (CVS $73) was in talks to acquire Aetna Inc. (AET $179). Neither company commented on the headline. Shares of AET rallied on the news, while CVS was slightly lower.

Jobless claims rise

Weekly initial jobless claims (chart) rose by 10,000 to 233,000 last week, but below forecasts of an increase to 235,000, with the prior week’s figure being revised higher by 1,000 to 223,000. The four-week moving average dropped by 9,000 to 239,500, while continuing claims decreased 3,000 to 1,893,000, north of estimates of 1,890,000.

The advance goods trade deficit widened slightly more than expected to $64.1 billion in September, from the upwardly revised $63.3 billion in August, and compared to expectations of $64.0 billion.
Preliminary wholesale inventories increased 0.3% month-over-month (m/m) in September, versus forecasts for a 0.4% increase, and following August's downwardly revised 0.8% rise.

Pending home sales were flat m/m in September, versus projections of a 0.5% rise, and following the negatively-revised 2.8% drop registered in August. Compared to last year, sales were 5.4% lower, versus estimates of a 4.2% drop. Pending home sales reflect contract signings and are used as a gauge of the pipeline of existing home sales, which unexpectedly rose in September.

The Kansas City Fed Manufacturing Activity Index for October unexpectedly showed growth (a reading above zero) accelerated, with the index rising to 23, versus forecasts for it to remain at September's 17 level.

Treasuries were lower, as the yields on the 2-year and 10-year notes, as well as the 30-year bond, were all 2 basis points higher at 1.62%, 2.45% and 2.96%, respectively.

The U.S. dollar rallied as the euro dropped in the wake of the monetary policy decision from the European Central Bank (ECB). Bond yields and the U.S. dollar have received some support from continued global economic and earnings optimism, most recently yesterday's solid gain in durable goods orders, as well as relative optimism regarding tax reform.

Tomorrow, the economic calendar will culminate with the first look (of three) at Q3 GDP, projected to show growth slowed a bit to a quarter-over-quarter (q/q) annualized rate of 2.6%, from the 3.1% pace seen in Q2, with personal consumption decelerating to a rise of 2.1% from 3.3%. Although the hurricanes are likely to have some impact, growth is projected to remain steady and post the best two-quarter performance since early 2015, per Bloomberg. The final University of Michigan Consumer Sentiment Index is also slated for release, with economists anticipating a reading of 101.1, matching the preliminary report, but above the 95.1 posted in September.

Schwab's Chief Investment Strategist Liz Ann Sonders notes in her article, Trying to Reason With Hurricane Season: The Aftermath of "Harma," that we expect to see a boost in economic activity associated with the recovery/rebuilding efforts. Liz Ann also points out in her latest article, Takin Care of Business: Several Important Kickers for a Strong Capex Cycle, that U.S. business capital spending (capex) has already picked up; but an even sharper recovery could be in the cards for 2018, while tax reform—if we get it—would be an additional kicker courtesy of the proposed 100% depreciation allowance. She adds that the pick-up in capex is a relatively new bright spot for the U.S. economy; and in 2018 it will likely be a shining characteristic of the latter innings of an economic expansion.

Europe higher as ECB trims and extends stimulus measures

European equity markets traded higher, with the euro seeing solid pressure versus the U.S. dollar as the European Central Bank announced following its monetary policy meeting that it will cut its bond buying program in half in January. However, the ECB said it will extend the time frame for its purchases to September, with the possibility of another extension if needed, while committing to a substantial reinvestment of maturing debt in 2018 and for an extended period. The announcement came as the ECB left rates unchanged and the markets paid close attention to President Mario Draghi's customary press conference that followed the decision, in which he appeared to foster a dovish takeaway regarding his views on the inflation and eurozone economic growth. Schwab's Jeffrey Kleintop, CFA, offers analysis of the global monetary policy front in his article, How the Shift by Central Banks May Affect the Stock Market. Bond yields in the region were lower following the ECB's announcement. The British pound also saw some pressure. Spanish stocks led the way, rallying on eased concerns toward the Catalonia turmoil.

Stocks in Asia finished mixed following the declines in the U.S. yesterday, while the markets digested a flood of diverging earnings reports and awaited the monetary policy decision out of the eurozone from the ECB. Japanese equities gained modest ground, rebounding after snapping a 16-day winning streak yesterday, with some upbeat earnings reports helping overshadow strength in the yen. Schwab's Liz Ann Sonders discusses with Randy Frederick in the video, Tracking Sentiment: Are Investors Too Optimistic About Stocks?. Stocks in mainland China advanced, but those traded in Hong Kong decreased, while a disappointing earnings report from the semiconductor sector weighed on South Korean securities, despite the nation reporting stronger-than-expected Q3 GDP growth. Finally, markets in Australia and India advanced.

Tomorrow’s international economic calendar will offer CPI and PPI from Japan, PPI from Australia, retail sales from Spain and housing prices from the U.K.

Stocks Overcome Early Pressure, Manage Mild Gains

Charles Schwab: On the Market

Posted: 9/28/2017 4:15 PM EDT

Stocks Overcome Early Pressure, Manage Mild Gains

 

U.S. stocks overcame some early weakness to finish the regular trading session slightly higher as market participants welcomed a surprising upward revision to Q2 GDP, while Fed rate hike expectations remained elevated and yesterday's GOP tax reform proposal found focus. The U.S. dollar pared its recent run and Treasury yields finished mixed. Crude oil registered lower after a midday reversal and gold was higher. In equity news, BlackBerry and Rite Aid announced quarterly results and Abbot Labs received a boost after the FDA approved its diabetes device.

The Dow Jones Industrial Average (DJIA) increased 40 points (0.2%) to 22,381, the S&P 500 Index was 3 points (0.1%) higher at 2,510, and the Nasdaq Composite was nearly unchanged at 6,453. In moderate volume, 766 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq. WTI crude oil declined $0.58 to $51.56 per barrel and wholesale gasoline was $0.01 lower at $1.61 per gallon. Elsewhere, the Bloomberg gold spot price added $4.18 to $1,286.97 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% lower at 93.17.

BlackBerry Ltd. (BBRY $10) reported a Q2 loss of $0.07 per share, or earnings-per-share (EPS) ex-items of $0.05 per share, versus the breakeven FactSet estimate, as revenues decreased 28.7% year-over-year (y/y) to $238 million, above the projected $222 million. The company said it achieved historical highs in total software and services revenue and gross margin, reflecting its complete transformation to a software company. BBRY reaffirmed its full-year guidance. Shares rallied.

Abbott Laboratories (ABT $54) gained solid ground after the U.S. Food and Drug Administration (FDA) approved the company's continuous glucose monitor for people with diabetes that does not require routine finger pricking. The treatment is already sold in other countries and will be the first in the U.S. DexCom Inc. (DXCM $45), a competitor that got FDA approval for its device late last year but it does require finger pricking, fell sharply on the news.

Conagra Brands Inc. (CAG $34) posted fiscal Q1 EPS of $0.36, or $0.46 ex-items, versus the expected $0.40, with revenues decreasing 4.8% y/y to $1.8 billion, roughly in line with expectations. The company said it continued to see gross margin expansion, despite higher-than-expected inflation and its planned increase in investments. CAG reaffirmed its full-year guidance and shares traded higher.

Rite Aid Corp. (RAD $2) reported Q2 EPS of $0.16, or a $0.01 per share loss ex-items, compared to the $0.01 shortfall that was expected, as revenues declined 4.4% y/y to $7.7 billion, below the projected $7.8 billion. Same-store sales dropped 3.4% y/y, versus the estimated 2.2% decrease. The company said its performance reflects a challenging reimbursement rate environment and the effects of an extended merger and asset sale process. Additionally, RAD announced that Kermit Crawford will join the company as president and chief operating officer. Shares finished sharply lower.

Final read on Q2 GDP revised higher, jobless claims increase

The final look (of three) at Q2 Gross Domestic Product (chart), the broadest measure of economic output, showed a quarter-over-quarter (q/q) annualized rate of growth of 3.1%, adjusted up from the 3.0% expansion posted in the first revision, where it was expected to remain. Q1 GDP expanded by an unrevised 1.2% rate. Personal consumption was unrevised at a 3.3% gain for Q2, matching estimates. Personal consumption grew by an unrevised 1.9% in Q1.

On inflation, the GDP Price Index was unadjusted at a 1.0% gain, in line with forecasts, while the core PCE Index, which excludes food and energy, was unadjusted at a 0.9% rise, matching expectations.

Weekly initial jobless claims (chart) rose by 12,000 to 272,000 last week, above forecasts of 270,000, with the prior week’s figure being revised higher by 1,000 to 260,000. The four-week moving average gained by 9,000 to 277,750, while continuing claims fell 45,000 to 1,934,000, south of estimates of 1,993,000.

The advance goods trade deficit narrowed unexpectedly to $62.9 billion in August, from the downwardly revised $63.9 billion in July, and compared to expectations of $65.1 billion.

Preliminary wholesale inventories rose 1.0% month-over-month (m/m) in August, versus forecasts for a 0.4% increase, and following July's unrevised 0.6% rise.

The Kansas City Fed Manufacturing Activity Index for September unexpectedly showed growth (a reading above zero) accelerated, rising to 17 from August's 16 reading, versus forecasts of a dip to 15.

Treasuries were mixed, with the yield on the 2-year note dipping 2 basis points (bps) to 1.46%,the yield on the 10-year note nearly unchanged at 2.31% and the 30-year bond rate adding 1 bp to 2.87%.
Treasury yields eased off a recent rally that took the rate on the 10-year note to multi-month highs, while the U.S. Dollar Index pared a jump as of late to levels not seen in over a month. These moves were bolstered by heightened December Fed rate hike expectations and apparent optimism regarding fiscal policy as some details regarding tax reform were released.

Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, offers analysis of the global monetary policy front in his article, How the Shift by Central Banks May Affect the Stock Market, on the Market Commentary page at www.schwab.com. Also, Schwab's Vice President of Legislative and Regulatory Affairs, Michael T. Townsend discusses the tax reform details his latest article, Tax Reform Framework Released, But The Road Ahead Is Long, on the Insights & Ideas page. Follow Jeff and Schwab on Twitter: @jeffreykleintop and @schwabresearch.

The stock markets remain near record highs despite a plethora of things for the market to worry about and Schwab's Chief Investment Strategist Liz Ann Sonders provides analysis of this resiliency in her article, Comfortably Numb? An Update on Investor Sentiment, on the Market Commentary page at www.schwab.com and follow Liz Ann on Twitter: @lizannsonders.

Tomorrow, the U.S. economic calendar will include personal income and spending for August, with economists expecting increases of 0.2% and 0.1%, respectively, and the Chicago Purchasing Managers Index, anticipated to show a slight downtick to a level of 58.7 in September from the 58.9 registered in August. Rounding out the day's releases will be the final University of Michigan Consumer Sentiment Index for September, forecasted to remain at the preliminary level of 95.3, but down from August's final read of 96.8.

Europe mostly higher on data, Asia mixed following advance in U.S. yesterday

European equity markets finished mostly higher, with an upbeat read on eurozone sentiment supporting the advance and helping the euro rebound. The British pound also recovered from recent weakness, as the two currencies have come under pressure amid a rally in the U.S. dollar on heightened Fed rate hike expectations and on the heels of yesterday's details of the tax reform framework. Bond yields in the region finished mixed. German consumer confidence unexpectedly dipped in October, while the nation's consumer price inflation came in slightly below expectations for September. However, September eurozone economic confidence improved more than expected. For a look at the global markets, see Schwab's Jeffrey Kleintop's, CFA, article, U.S. vs International: What Do Earnings Tell Us About What May Be Ahead?, on the Market Commentary page at www.schwab.com.

Stocks in Asia finished mixed on the heels of yesterday's gains in the U.S., which were bolstered by an upbeat durable goods orders report and the release of details of tax reform framework for the world's largest economy. The U.S. dollar has rallied to apply pressure on the yen, which helped Japanese equities move higher. However, lingering regulatory concerns and dampened conviction ahead of next week's holiday break weighed on Chinese stocks. Australian securities ticked higher and South Korean shares finished flat. Indian equities snapped a seven session losing streak that developed amid recent economic data that fostered concerns and led to the markets retreat from record highs. For analysis of global investing, see Schwab's Jeffrey Kleintop's, CFA, and Randy Frederick's video, Is An Optimistic Outlook for Global Equities Warranted?, on the Insights & Ideas page at www.schwab.com.

The international economic docket for tomorrow will be dominated with reports from Japan as it releases its jobless rate, CPI, retail sales, industrial production, vehicle production, housing starts and construction orders. Additional releases include private sector credit from Australia, industrial production from South Korea, retail sales and unemployment claims from Germany and 2Q GDP, consumer credit and business investment from the U.K.

Stocks Fade to a Flat Finish

Charles Schwab: On the Market

Posted: 6/22/2017 4:15 PM ET

Stocks Fade to a Flat Finish

U.S. equities closed the regular trading session mostly flat as markets were unable to hold gains that followed an afternoon surge in healthcare stocks on the heels of the Senate unveiling its bill to replace the Affordable Care Act. Treasuries were higher following economic reports that showed weekly jobless claims increased, leading indicators matched expectations and regional manufacturing activity was better than expected. Gold and crude oil prices moved higher and the U.S. dollar was flat.

The Dow Jones Industrial Average (DJIA) declined 13 points (0.1%) to 21,397, the S&P 500 Index decreased 1 point to 2,435, and the Nasdaq Composite gained 3 points to 6,237. In moderately-heavy volume, 841 million shares were traded on the NYSE and 2.2 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.21 to $42.74 per barrel and wholesale gasoline ticked $0.02 higher to $1.43 per gallon. Elsewhere, the Bloomberg gold spot price increased $3.53 to $1,250.01 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was flat at 97.55.

Accenture Plc (ACN $122) reported Q3 diluted earnings-per-share (EPS) of $1.05 or $1.52 ex-items, compared to the $1.52 FactSet estimate, while revenues increased 5.0% year-over-year (y/y) in U.S. dollars and 7.0% in local currency to $8.9 billion. The diluted EPS of $1.05 includes the impact of a previously disclosed settlement charge of $510 million in regard to the termination of its U.S. pension plan. Shares of ACN traded sharply lower.

After the closing bell yesterday, Oracle Corp. (ORCL $50) announced fiscal 2017 Q4 EPS of $0.76 or $0.89 ex-items versus the $0.78 FactSet estimate, while revenues topped estimates, increasing 2.8% y/y to $10.9 billion. CEO, Mark Hurd said the company is experiencing rapid adoption of the Oracle Cloud and is expecting EPS growth to accelerate in fiscal 2018. ORCL rallied.

Carnival Corp. (CCL $66) reported Q2 GAAP EPS of $0.52, compared to the FactSet estimate of $0.47, while revenues rose 5.4% y/y to $3.9 billion, mostly in line with expectations. The company also forecasted that changes in fuel prices and currency exchange rates are expected to decrease earnings by $0.35 per share for full-year 2017. EPS guidance for the current fiscal year was updated to be in the range of $3.60 to $3.70 compared to March guidance of $3.50 to $3.70. CCL ticked slightly to the downside.

Jobless claims higher than expected and leading indicators match projections

Weekly initial jobless claims (chart) increased by 3,000 to 241,000 last week, above the Bloomberg forecast of 240,000, with the prior week’s figure upwardly revised at 238,000. The four-week moving average increased by 1,500 to 244,750, while continuing claims increased by 9,000 to 1,944,000, north of estimates of 1,928,000.

The Conference Board's Index of Leading Economic Indicators (LEI) (chart) for May rose 0.3% month-over-month (m/m), matching projections and compared to last month's downwardly adjusted 0.2% increase. The biggest positive contributor to the index was interest rate spread, while the largest negative contributor was building permits.

The Kansas City Fed Manufacturing Activity Index for June increased to 11, from May's 8 reading, topping forecasts of a rise to 9, with a level north of zero depicting expansion.

Treasuries finished slightly higher with the yields on the 2-year note and the 30-year bond declining 1 basis point (bp) to 1.34% and 2.72%, respectively and the yield on the 10-year note decreasing 2 bps to 2.15%. In the Bond Market Mid-Year Outlook: Redefining the Borders of 'Lower for Longer', Schwab's Chief Fixed Income Strategist, Kathy Jones informs us that the bond market continues to confound the experts. Each year since the end of the recession in 2009, consensus expectations have called for higher bond yields and the death of the 35-year bond bull market. Yet 10-year Treasury yields are now nearly 200 basis points lower than in 2010. For Schwab's viewpoint on the second half of 2017 be sure to read the whole article on the Fixed Income page at www.schwab.com and follow Kathy on Twitter: @kathyjones.

Tomorrow, the U.S. economic calendar will bring a look at the housing sector in the form of the May new home sales report, with economists expecting a 3.7% month-over-month (m/m) increase to a rate of 590,000 units after dropping by 11.4% m/m to 569,000 units in April, as well as Markit's preliminary Manufacturing and Services PMIs for June with the manufacturing index forecasted to inch higher to 53.0 from 52.7 and the services index expected to tick lower to 53.5 from 53.6. Readings above 50 for both indexes denote expansion in activity.

Europe and Asia finish mixed

European stocks finished trading mixed as healthcare issues received a late-session boost after the U.S. Senate released details of its bill aimed at replacing the Affordable Care Act. Markets in the region were initially weighed down as the recent pressure that pushed oil prices into bear market territory, declines in commodity-linked issues and political uncertainty fostered some caution among market participants. Amid the pullback in oil and other commodities, investors have been vigilant of potential downward pressure on inflation and how that may impact central bank policies. In other developments in the region, the Bank of England's chief economist said that it may be prudent to withdraw some stimulus in the second half of the year and that he is likely to vote for a rate hike as long as the economic data justifies it, per Bloomberg. Also, U.K. Prime Minister Theresa May arrived in Brussels where she is expected to discuss Brexit details with European Union leaders as a two-day European Council meeting commenced. In light regional economic news, business confidence figures from France were better than expected, while a read on manufacturing confidence was just shy of forecasts. The euro and British pound moved slightly lower versus the U.S. dollar, while bond yields in the region were mostly lower.

Global trade will likely garner some attention in the near future as the latest Schwab Market Perspective: Goldilocks…or the Three Bears?, informs us that the end of the month brings the end of the 90-day trade review ordered by President Trump to identify trade abuses. Our experts explain that trade growth can have a meaningful impact on corporate revenue growth and, as a result, drive earnings and stock price performance. Fortunately, global trade growth looks set for the highest pace in a decade, with the exception of the snapback in 2010-11. This is indicated by the export orders component of the Eurozone purchasing managers' index (PMI), which has done a good job of forecasting global trade growth in the months ahead. Read more on the Markets & Economy page at www.schwab.com and follow Schwab on Twitter: @schwabresearch.

Stocks in Asia finished mixed following yesterday's dip in crude oil prices, while technology companies advanced on the heels of gains for the group in U.S. trading. Mainland Chinese shares dipped after gaining ground in the previous session following the announcement that MSCI will include its A-shares in the company's emerging markets indexes after rejecting its prior three attempts to join. Stocks trading in Hong Kong were also lower. Japanese equities realized losses for a second-straight day following the decline in crude oil prices, while volatility for the Japanese Nikkei 225 Index was near the lowest levels in over a decade and the yen strengthened versus the U.S. dollar. Indian listings finished flat, though on Wednesday the Securities and Exchange Board of India relaxed takeover and restructuring rules for companies with stressed assets, per Bloomberg. Finally, South Korean equities advanced and Australian securities were led higher by a recovery in some energy and materials stocks after selling off the previous session. For a deeper dive into the global market landscape, see the video from Schwab's Jeffrey Kleintop, CFA, What's the Current State of the Global Economy? on the Insights & Ideas page at www.schwab.com and be sure to follow Jeff on Twitter: @jeffreykleintop.

Major reports from the international economic docket for tomorrow will be limited to releases from across the pond with GDP from France and industrial orders from Italy, while we will also receive preliminary Markit Manufacturing and Services PMIs from the Eurozone, Germany and France.

Stocks Deflate on News of Healthcare Vote Delay

Charles Schwab: On the Market

Posted: 3/23/2017 1:15 PM ET

Stocks Deflate on News of Healthcare Vote Delay

After being modestly higher for most of the day amid cautious optimism over this evening's vote on a widely-watched healthcare bill, U.S. equities lost steam late to finish near the flatline after reports surfaced that the vote would not happen today amid continued political wrangling. News on the economic front was mostly positive, with new home sales surprising to the upside in February, and as some regional manufacturing activity moved further into expansion territory, while weekly jobless claims unexpectedly increased. Treasuries were little changed and gold was lower, while the U.S. dollar ticked higher and crude oil prices lost ground.

The Dow Jones Industrial Average (DJIA) lost 5 points to 20,657, the S&P 500 Index shed 3 points (0.1%) to 2,346, and the Nasdaq Composite declined 4 points (0.1%) to 5,818. In moderate volume, 805 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq. WTI crude oil fell $0.34 to $47.70 per barrel and wholesale gasoline lost a penny to $1.59 per gallon. Elsewhere, the Bloomberg gold spot price declined $3.04 to $1,245.80 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% higher at 99.74.

PVH Corp. (PVH $99) announced 4Q earnings-per-share (EPS) of $1.26 on a GAAP basis and $1.23 ex-items, topping FactSet projections of $1.19, while revenues dipped 0.4% year-over-year (y/y) to $2.0 billion, mostly in line with expectations. The company announced 2017 EPS guidance on a GAAP basis of $6.20 to $6.30 for the year and of $0.73 to $0.75 for 1Q, and the Board authorized an increase and extension to the current stock repurchase program. Shares rallied.

Cintas Corp. (CTAS $126) announced 3Q EPS of $1.11 ex-items, besting the consensus estimate of $1.07, while revenues increased 5.3% y/y to $1.3 billion, matching forecasts. Also, Scott Farmer, the company Chairman and CEO stated that this was the 14th consecutive quarter of y/y gross margin improvement. Shares of CTAS were nicely higher.

With equity news a bit on the lighter side, a large amount of investor focus was tuned to the current health-care bill that was expected to be voted on later tonight by the House of Representatives, but reportedly delayed until tomorrow. Though the legislative process is currently underway, many questions still surround the health-care industry and may or may not be addressed by the proposed legislation, however, Schwab's Director of Market and Sector Analysis, Brad Sorensen, CFA tackles this sector with his three-to-six month outlook in the most recent Schwab Sector Views: How Should Investors Look at Health Care Now?. And be sure to check out Brad's views on ten other sectors at www.schwab.com/marketinsight. Follow Schwab on Twitter: @schwabresearch.

New home sales surprise to the upside, jobless claims unexpectedly increase

New home sales (chart) rose 6.1% month-over-month (m/m) in February to an annual rate of 592,000, above the Bloomberg forecast of 564,000 units, and compared to the upwardly revised 558,000 unit pace in January. The median home price was down 4.9% y/y at $296,200. New home inventory dipped to 5.4 months of supply at the current sales pace. Sales declined m/m in the Northeast, but rose sharply in the Midwest, and also increased in the West and South. New home sales are based on contract signings instead of closings.

Weekly initial jobless claims (chart) increased by 15,000 to 258,000 last week, above forecasts of 240,000, with the prior week’s figure being upwardly revised to 243,000. The four-week moving average rose to 240,000 from 239,000, while continuing claims dropped by 39,000 to 2,000,000, south of estimates of 2,040,000.

The Kansas City Fed Manufacturing Activity Index for March rose to 20, from February's 14 reading, where it was forecasted to remain, with a level north of zero depicting expansion.

Also, Federal Reserve Chair Janet Yellen delivered opening remarks this morning at a conference in Washington D.C. Though some market participants likely listened for indications on the trajectory of the U.S. economy and the pace of future rate hikes, the Fed Chair did not comment on monetary policy.

Treasuries were nearly unchanged, as the yield on the 2-year note lost 1 basis point (bp) to 1.24%, while the yields on the 10-year note and the 30-year bond were flat at 2.41% and 3.02%, respectively.

As noted in the recent Schwab Market Perspective: Teflon Market, helping to bolster our belief in a strengthening economy—and our bullish stance—is the increased hawkishness of the Federal Reserve and their decision to hike rates at the March Federal Open Market Committee (FOMC) meeting. Additionally, the Fed signaled willingness to continue to hike rates in the coming months, which would mark the first time we would see more than one hike in a year since the financial crisis. Read the whole perspective at www.schwab.com/marketinsight. Also, for analysis on the Fed and its implications for bond investors, see the video from Schwab's Chief Fixed Income Strategist, Kathy Jones and Vice President of Trading and Derivatives, Randy Frederick titled Three Fed Hikes Seen in 2017: How Should Bond Investors Respond?, at www.schwab.com/insights. Follow Kathy and Randy on Twitter: @kathyjones and @randyafrederick.

The week's economic calendar will culminate tomorrow with a look at the manufacturing sector, as preliminary durable goods orders will be released, forecasted to show a 1.3% m/m increase for the headline rate during February, a 0.6% rise excluding transportation, while orders for nondefense excluding aircraft, considered a proxy for business spending, is estimated to have ticked 0.2% higher m/m. Finally, the preliminary Markit Manufacturing PMI Index will be reported, with economists expecting an uptick to a level of 54.8 for March from the 54.2 posted in the month prior, with a reading above 50 indicating expansion in activity.

Europe and Asis mostly higher ahead of U.S. health care vote

European equity markets finished the trading day higher, as traders await today's vote on the proposed replacement for the Affordable Care Act in the U.S. House of Representatives, with market participants looking toward the outcome as a gauge of the Trump Administration's ability to implement its pro-growth policies. The European Central Bank (ECB) gave banks in the euro-area approximately $252 billion, the largest net amount yet, in its Targeted Longer-Term Refinancing Operations program, as ECB President Mario Draghi signaled that time is running out for banks to get their house in order with the end of the central bank's current quantitative easing program in mind, which according to a Bloomberg survey is now expected to be around mid-2018. In Germany, the country's lower house of parliament is in the early stages of introducing new laws with respect to insolvency proceedings after a recent Tax Restructuring Decree was overturned, while in other tax news, the country reported a rise in February tax revenue, which benefitted from stable economic development, with income and sales tax revenue both increasing per the Deputy Finance Minister. Meanwhile, in the U.K., some upbeat retail sales data did little to dispel the notion of concern about the outlook of consumers in Britain if the current rise in inflation, which is expected to reach 3 percent later this year, continues.

Stocks in Asia rebounded some from yesterday's selloff and closed mostly higher with financial and industrial shares leading gains. Japanese equities advanced, shrugging off three days of declines, with the yen slightly weaker, as the current health-care bill discussions in the U.S. may be increasing the demand for safe-haven assets. The yen had risen in the previous seven-straight sessions. Mainland Chinese securities increased slightly, and those traded in Hong Kong were mostly flat amid reports that the country's financial regulators may need to take further steps to reign in leverage that continues to mount after the bond market in the world's second largest economy experienced one of its worst months since December 2010. Some smaller banks in the country were said to have missed debt payments amid a surge in interbank rates, which spurred emergency liquidity injections from the central bank. Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, discusses how rate hikes by the Federal Reserve put pressure on the People's Bank of China to respond to manage the currency and capital flows in his recent article, The Fed has China in a Tough Spot, at www.schwab.com/marketinsight and follow Jeff on Twitter: @jeffreykleintop. Elsewhere, stocks in Australia gained ground, led higher by strength in mining and energy stocks, with a rebound in crude oil prices also indirectly lending support, while markets in South Korea and India also advanced.

Tomorrow, manufacturing PMI reads from across the globe will dominate the international economic calendar, while other reports on tap include consumer sentiment from South Korea, trade data from Australia, the Leading Index from Japan, GDP from France, and PPI from Spain.

Investors Remain Uncertain

Charles Schwab: On the Market

Posted: 2/23/2017 4:15 PM ET

Investors Remain Uncertain

U.S. equities finished mixed for a second-straight day, with the Dow continuing to add to its record run, as investors weighed lingering political risks in the U.S and Europe, March Fed rate hike uncertainty and continued signs of solid economic activity. Treasury yields and the U.S. dollar were lower, and gold gained ground, while crude oil prices were higher, courtesy of bullish oil inventory reports. Earnings again dominated the equity front, with mixed results.

The Dow Jones Industrial Average (DJIA) increased 35 points (0.2%) to 20,810, the S&P 500 Index inched 1 point higher to 2,364, and the Nasdaq Composite fell 25 points (0.4%) to 5,826. In moderately-heavy volume, 927 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq. WTI crude oil gained $1.06 to $54.45 per barrel and wholesale gasoline added $0.02 to $1.75 per gallon. Elsewhere, the Bloomberg gold spot price increased $11.44 to $1,248.88 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% lower at 101.01.

Tesla Inc. (TSLA $256) reported a 4Q loss of $0.78 per share, or $0.69 per share ex-items, versus the FactSet estimate of a $0.53 per share shortfall, with revenues rising 88.0% y/y to $2.3 billion, above the projected $2.2 billion. Separately, the company announced that its Chief Financial Officer will leave the company and its previous CFO will return. Shares of TSLA fell.

HP Inc. (HPQ $18) posted fiscal 1Q earnings-per-share (EPS) of $0.36, or $0.38 ex-items, compared to the expected $0.37, with revenues rising 4.0% y/y to $12.7 billion, north of the estimated $11.8 billion. HPQ issued 2Q EPS guidance that bracketed analysts' forecasts. Shares were nicely higher.

L Brands Inc. (LB $49) announced 4Q profits of $2.18 per share, or $2.03 ex-items, compared to the forecasted $1.90, on previously reported revenues of $4.5 billion. The company issued 1Q and full-year EPS guidance that severely missed the Street's expectations. Shares were sharply lower.

Shares of Boston Scientific Corp. (BSX $24) declined after the heart device maker voluntarily removed all of its Lotus Valve products from global commercial and clinical sites due to reports of premature release of a pin connecting the device to the delivery system. BSX said it expects to bring the device back to market in Europe and other regions in 4Q 2017 and plans a U.S. launch for mid-2018.

Schwab’s Chief Investment Strategist Liz Ann Sonders offers a look at the earnings front in her latest article, Better Days: Earnings Growth Picks Up Sharply in 2017, at www.schwab.com/marketinsight and follow Liz Ann on Twitter: @lizannsonders.

Jobless claims rise

Weekly initial jobless claims (chart) rose by 6,000 to 244,000 last week, above forecasts of 240,000, with the prior week’s figure being revised lower to 238,000. The four-week moving average fell by 4,000 to 241,000, while continuing claims declined by 17,000 to 2,060,000, south of estimates of 2,068,000.

The Kansas City Fed Manufacturing Activity Index for February rose to 14, from January's 9 reading, where it was forecasted to remain, with a level north of zero depicting expansion.

Treasuries were higher, as the yields on the 2-year and 10-year notes dropped 4 basis points (bps) to 1.18% and 2.38%, respectively, while the 30-year bond rate dipped 2 bp to 3.02%. For a look at the bond markets, see Schwab's Director of Income Planning, Rob Williams', CFP, and Senior Research Analyst, Cooper Howard's, CFA, latest article, Short-Term Bonds: Why They Could Outperform As Interest Rates Rise, at www.schwab.com/marketinsight.

Stocks remain near all-time highs, while the U.S. dollar has rallied and Treasury yields are holding strong post-election gains, courtesy of continued upbeat economic data and optimism of a mix of fiscal stimulus being delivered by President Donald Trump. However, these markets have cooled modestly as of late amid domestic and European political risk, along with Fed Chair Janet Yellen's Congressional testimony last week and yesterday's minutes from the Fed's recent meeting that have kept a March rate hike on the table.

As noted in the latest Schwab Market Perspective: Not So Fast!, elevated earnings and economic expectations could lead to a pullback or more sideways action but we believe the bull market in U.S. stocks will continue. If economic data continues to surprise on the upside, a March rate hike is likely to be on the table; while there is an additional risk that the Fed may be forced to speed up the tightening process should inflation accelerate from here. Read more at www.schwab.com/marketinsight, and for more on the Fed see our article, Changes at the Fed: What Does the Coming Personnel Shake-up Mean?, at www.schwab.com/insights. Follow Schwab on Twitter: @schwabresearch. Finally, for a look at the U.S. political front, see Schwab's Vice President of Legislative and Regulatory Affairs, Michael T. Townsend's latest article, Washington's Way: Why Trump's Policy Changes Could Take Time, at www.schwab.com/insights.

The week’s economic calendar will culminate tomorrow with the releases of new home sales, with economists expecting a 7.5% month-over-month (m/m) increase during January to a level of 576,000 units, as well as the final February University of Michigan Consumer Sentiment Index, forecasted to tick higher to a level of 95.8 from the preliminary figure of 95.7, but below the 98.5 posted in January.

Europe dips on data and political uncertainty, Asia mixed

European equities finished mostly lower, with the markets digesting diverging earnings and economic data, along with late-yesterday's release of the U.S. Fed meeting minutes that suggested a March rate hike remains on the table. Also, political risk in the U.S. and Europe remained, with traders grappling with the former's uncertainty regarding potential reflationary policy pledges and the latter's looming key election in France. For more on the global markets and the European political risk, see Schwab's Chief Global Investment Strategist Jeffrey Kleintop's, CFA, latest article, The stock market sees nothing to worry about—that may be about to change. Jeff notes that Europe's economy is performing the best in many years on many key measures and stock markets are currently behaving as if there is nothing to worry about, but that may be about to change now that we are within 45 trading days of the French Presidential election. He concludes that savvy investors should be prepared for a rise in volatility in global stock markets in the coming months. Read more at www.schwab.com/oninternational, and be sure to check out Jeff's article, Five Reasons to Stay Invested Despite Heightened Uncertainty. Follow Jeff on Twitter: @jeffreykleintop.

In economic news, German 4Q GDP growth matched forecasts, French manufacturing confidence topped expectations, U.K. retail sales bested forecasts, and Italian retail sales unexpectedly fell. The euro and British pound moved higher versus the U.S. dollar, while bond yields in the region finished mixed.

Stocks in Asia finished mixed, with the global market rally pausing yesterday as traders assess the recent run, political uncertainty in the U.S. and Europe, and the preserved possibility of a March rate hike in the U.S. Japanese equities finished flat, with the yen holding yesterday's gain, while stocks in China and Hong Kong slipped from a recent advance. Australian securities moved lower on the heels of a larger-than-expected drop in 4Q capital expenditures and following yesterday's hawkish commentary from Reserve Bank of Australia Governor Lowe. Meanwhile, markets in South Korea ticked higher after the Bank of Korea kept its monetary policy unchanged, and India's bourse extended its winning streak to six sessions. Schwab's Director of International Research, Michelle Gibley, CFA, provides some timely analysis of global investing in her articles, Currency Hedging: 5 Things You Need to Know and Emerging Markets: Why They Deserve a Place in Your Portfolio at www.schwab.com/oninternational, and be sure to check out our release, Why Your Portfolio Needs International Stocks—Despite 2017 Risks at www.schwab.com/insights.

Another light economic calendar is in store for tomorrow overseas, with reports slated for release to include consumer confidence in South Korea, PPI from Spain, and industrial orders and sales from Italy.

Stocks Edge Lower on Mixed Data

Charles Schwab: On the Market

Posted: 10/27/2016 4:15 PM ET

Stocks Edge Lower on Mixed Data

U.S. stocks finished the regular trading session lower as domestic durable goods orders showed business spending fell more than expected. Treasury yields rallied, while the U.S. dollar, gold and crude oil prices were also higher. Bucking the general equity trend, healthcare stocks rose following upbeat results from Bristol-Myers Squibb and financials found some support on the rise in bond yields. Overseas, Europe showed some late-day resiliency, with U.K. GDP topping forecasts.

The Dow Jones Industrial Average (DJIA) decreased 30 points (0.2%) to 18,170, the S&P 500 Index was 6 points (0.3%) lower at 2,133 and the Nasdaq Composite lost 34 points (0.7%) to 5,216. In moderate volume, 962 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq. WTI crude oil decreased $0.54 to $49.72 per barrel, wholesale gasoline ticked $0.01 higher to $1.48 per gallon and the Bloomberg gold spot price advanced $2.55 to $1,269.65 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly 0.3% higher at 98.91.

Tesla Motors Inc. (TSLA $204) reported 3Q earnings-per-share (EPS) of $0.71, excluding items that may impact comparability with the $0.32 FactSet estimate, as revenues surged 145.4% year-over-year (y/y) to $2.3 billion, compared to the projected $2.2 billion. TSLA pared solid gains to close modestly higher.

Ford Motor Co. (F $12) posted 3Q EPS ex-items of $0.26, above the expected $0.20, with revenues declining 5.8% y/y to $35.9 billion, versus the projected $33.8 billion. F maintained its full-year earnings outlook. North American and European profits topped forecasts, though South American and Asia Pacific bottomline results missed and its free cash flow was negative. Shares moved lower.

United Parcel Service Inc. (UPS $108) announced 3Q profits of $1.44 per share, in line with forecasts, as revenues rose 4.9% y/y to $14.9 billion, versus the estimated $14.7 billion. UPS reaffirmed its full-year EPS guidance. Shares closed to the downside.

Twitter Inc. (TWTR $17) reported 3Q earnings of $0.13 per share, topping the estimated $0.09, as revenues grew 8.0% y/y to $616 million, exceeding the projected $604 million. The social media company's total monthly active users came in slightly above expectations. TWTR issued stronger-than-expected full-year operating earnings guidance, while confirming the restructuring of 9.0% of its global workforce. Shares finished higher.

Bristol-Myers Squibb Co. (BMY $52) posted 3Q EPS ex-items of $0.77, above the forecasted $0.65, as revenues rose 21.0% y/y to $4.9 billion, north of the expected $4.8 billion. BMY raised its full-year profit outlook and announced a new $3.0 billion share repurchase program. Shares traded nicely higher. For analysis of the healthcare cost environment, see Schwab's Chief Investment Strategist Liz Ann Sonders' latest article, Vertigo: Effect of Spiking Healthcare Costs on Consumers, at www.schwab.com/marketinsight and follow Liz Ann on Twitter: @lizannsonders.

Qualcomm Inc. (QCOM $70) announced an agreement to acquire NXP Semiconductors NV (NXPI $99) for $110.00 per share in cash, representing a total enterprise value of about $47.0 billion. Shares of both companies were higher.

Durable goods orders mixed, jobless claims dip

September preliminary durable goods orders (chart) dipped 0.1% month-over-month (m/m), compared to Bloomberg's estimate of a flat reading and August's upwardly revised 0.3% gain. Ex-transportation, orders rose 0.2% m/m, matching forecasts, and August's favorably revised 0.1% increase. Orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, fell 1.2%, versus projections of a 0.1% dip, and following the upwardly revised 1.2% rise in the month prior.

Weekly initial jobless claims (chart) declined by 3,000 to 258,000 last week, compared to forecasts of a decrease to 256,000, as the prior week's figure was upwardly revised by 1,000 to 261,000. The four-week moving average rose by 1,000 to 253,000, while continuing claims dropped 15,000 to 2,039,000, south of the estimated level of 2,052,000.

Pending home sales rose 1.5% m/m in September, versus projections of a 1.0% gain and following the downwardly revised 2.5% drop registered in August. Compared to last year, sales were 2.0% higher, versus forecasts of a 4.0% increase. Pending home sales reflect contract signings and are used as a gauge of the pipeline of existing home sales, which rose in September to the highest level since June

The Kansas City Fed Manufacturing Activity Index for October remained at September's 6 level, compared to forecasts of a decline to 3, with a reading north of zero depicting expansion.

Treasuries dropped with the yield on the 2-year note rising 1 bp to 0.88%, the yield on the 10-year note gaining 5 bps to 1.84%, and the 30-year bond rate advancing 6 bps to 2.60%. Schwab's Chief Fixed Income Strategist, Kathy Jones notes in her article, Are Bond Yields About to Rise?, the shift to higher yields is likely to be slow, in our view, but markets don’t appear to be prepared for the change. We suggest investors prepare for a potential rise in bond yields by trimming exposure to bonds with either long durations or high credit risk. Read more at www.schwab.com/onbonds and follow Kathy on Twitter: @kathyjones.

Tomorrow, the U.S. economic calendar will bring the first read (of three) on 3Q GDP, projected to show growth accelerated to an annualized quarter-over-quarter pace of 2.6%, after expanding by 1.4% in 2Q. Personal consumption is anticipated to have decelerated a bit to a 2.6% growth rate after 2Q's 4.3% jump. Schwab's Director of Market and Sector Analysis Brad Sorensen, CFA informs us in his latest Schwab Sector Views: The Most Wonderful Time of the Year…Already?, that according to the U.S. Bureau of Economic Analysis, consumer spending makes up about 70% of U.S. economic activity—meaning not only is the holiday shopping season hanging on the status of the consumer, but to a large extent, so is the health of the U.S. economy. Read the whole article, as well as Brad's view on all 11 sectors at www.schwab.com/insights and follow Schwab on Twitter: @schwabresearch.

Additional reports on tap for tomorrow will include the 3Q Employment Cost Index, expected to show a 0.6% increase, matching the prior quarter's rise and the final University of Michigan Consumer Sentiment Index for October, expected to be revised modestly higher to 88.2 from the preliminary read of 87.9, but down from September's 91.2 level.

The markets continue to grapple with U.S. political uncertainty as the November election looms, and Schwab's Vice President of Legislative and Regulatory Affairs, Michael T. Townsend offers his latest article, Final Clinton-Trump Debate Sets Up a Sprint to the Finish Line, as part of our election 2016 commentary at www.schwab.com/insights/category/election-2016, where you can also find timely analysis of The Stock Market and Election Cycles. Be sure to follow Schwab on Twitter: @schwabresearch.

Europe shows some resiliency, Asia mixed

European equities battled back from early losses that stemmed from some disappointing earnings reports, while oil & gas issues led to the upside with crude oil prices recovering from a recent sell-off and financials also found support. A preliminary read on U.K. 3Q GDP showed growth unexpectedly accelerated to a 2.3% y/y pace, from the 2.1% expansion posted in 2Q, where economists had expected it to remain. Also, q/q, U.K. growth came in at 0.5%, from 0.7% in 2Q, but above the expected 0.3% increase. The report was delivered by the Office for National Statistics, which noted that there was "little evidence of a pronounced effect" from the late-June vote in the U.K. to exit the European Union, known as a Brexit, adding credence to the article by Schwab's Director of International Research, Michelle Gibley, CFA, Keep Calm and Carry On: The Brexit Shock That Wasn't at www.schwab.com/marketinsight. Both the euro and the British pound declined versus the U.S. dollar, while bond yields in the region gained ground. The global markets continued to grapple with political and monetary policy uncertainty, while Sweden's central bank kept its benchmark interest rate unchanged at a negative rate.

Stocks in Asia finished mixed with the continued drop in crude oil prices on Wednesday pressuring the energy sector, while the global markets remain focused on earnings season. For analysis of earnings and the stock markets, Schwab's Jeffrey Kleintop, CFA, offers an outlook for the stock markets and earnings growth his latest article, Three Reasons Stocks May Avoid Another Lost Decade, at www.schwab.com/marketinsight. Japanese equities declined despite some weakness in the yen, as traders grapple with the Bank of Japan's recent shift in monetary policy to targeting the yield curve. Stocks trading in mainland China and Hong Kong were mostly lower with oil & gas issues seeing pressure and a report showing growth in the nation's industrial profits decelerated solidly in September. Australian securities were led lower by weakness in basic materials and oil & gas issues. Indian equities rebounded from yesterday's decline that came on concerns about loan-loss provisions in the banking sector. Stocks in South Korea rose.

Tomorrow, the international economic docket will yield household spending and CPI from Japan and new home sales and PPI from Australia. Releases from across the pond will include advance 3Q GDP, PPI, CPI and consumer spending from France, CPI from Germany and consumer confidence for the Eurozone.