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Stock Market Wrap-Up: October 18, 2024 – A Day of Records and Surprises
The final trading day of the week saw the stock market navigate a mix of record highs, surprising earnings reports, and significant corporate announcements. Here’s a detailed look at what transpired on Wall Street.
Netflix Steals the Show
The day began on a high note, thanks largely to Netflix ($NFLX). The streaming giant's quarterly earnings report exceeded Wall Street's expectations, sending its stock soaring to an all-time high. Netflix reported a 15% increase in revenue and a 40% jump in net income, surpassing $2 billion. This robust performance not only boosted Netflix's stock by over 10% but also alleviated concerns about the broader tech sector's third-quarter performance.
Market Indices: A Mixed Bag
Despite Netflix's stellar showing, the major indices had a mixed day. The Nasdaq Composite, heavily weighted towards technology, rose about 0.6% to 0.8%, driven by the surge in tech stocks. The S&P 500, on the cusp of setting a new all-time high, advanced by approximately 0.4% to 0.5%, aiming for its sixth consecutive week of gains—the longest weekly winning streak of 2024.
The Dow Jones Industrial Average, fresh from setting a new record closing high the previous day, was relatively flat, with a slight decline of about 0.2% in premarket trading. However, it managed to stay near its record levels, reflecting the overall bullish sentiment.
Economic Data: Housing and Interest Rates
On the economic front, the data was mixed. Housing starts for September came in slightly above expectations at 1.354 million seasonally adjusted, annualized units, though this was a tad lower than the previous month's revised figure. However, building permits, a proxy for future housing starts, missed expectations at 1.428 million units, down from the revised August figure of 1.47 million. This slight dip in permits could be attributed to the unexpected rise in mortgage rates last month.
The 10-year Treasury yield, which had climbed above 4.1% early in the day, fell to 4.09% following the release of the housing data. This minor adjustment reflects the market's cautious optimism about the economy's resilience.
Corporate Moves and Earnings
Several other significant corporate announcements and earnings reports shaped the market's mood. CVS Health ($CVS) saw its stock plummet by over 6% after the company announced the replacement of CEO Karen Lynch with David Joyner, an executive vice president. CVS also projected adjusted earnings per share for the third quarter to be between $1.05 and $1.10, well below Wall Street's estimate of $1.70.
In contrast, Apple ($AAPL) shares advanced in premarket trading on reports that the new iPhone 16 is selling better in China than its predecessor. This positive news from one of Apple's key markets added to the overall optimism in the tech sector.
American Express ($AXP) reported better-than-expected Q3 earnings, with $3.49 per share outpacing the $3.27 analysts had forecast. Despite this, the stock saw a slight sell-off, possibly due to its already impressive year-to-date gains of over 53%.
Procter & Gamble ($PG) also reported fiscal Q1 earnings that beat estimates by 3 cents per share, though revenues fell short of expectations. Weaker sales in greater China were cited as the main reason for this shortfall.
Commodities and Cryptocurrencies
In the commodities sector, gold prices reached a historic milestone, exceeding $2,700 per ounce for the first time. This surge was driven by fears surrounding the conflict in the Middle East and uncertainties about the U.S. presidential election, prompting investors to seek safer assets.
Silver extended its rally, rising to about $32.50, while Bitcoin held steady near a three-month high, nearing the $70,000 mark. This stability in cryptocurrencies was further boosted by a digital asset platform's stock surging over 5% due to Bitcoin's recent rally.
Fed Rate Cuts: A Pending Decision
The Federal Reserve's next move on interest rates remains a topic of interest. With stronger economic numbers in retail sales and other areas, there is growing sentiment that the Fed might halt rate cuts. The upcoming Employment Situation report for October, scheduled for November 1, will be crucial in determining whether the Fed will proceed with the promised 25 basis points rate cut or hold steady. If job numbers revert to their recent anemic levels, a rate cut in November seems likely. However, if jobs numbers remain strong, the Fed might choose to hold rates steady in December.
Market Sentiment and Volatility
The fear gauge, the CBOE Volatility Index (VIX), was down 2.4% to 19.11, indicating a relatively calm market despite the various news and data releases. The total trading volume was lower than the 20-session average, suggesting that investors are cautiously optimistic but not overly aggressive.
Conclusion
As the week comes to a close, the stock market is poised for its longest weekly winning streak of 2024. Netflix's strong earnings report has set a positive tone for the tech sector, while economic data and corporate announcements have provided a mixed but generally positive backdrop.
The ongoing geopolitical tensions and the upcoming U.S. presidential election continue to influence investor behavior, driving interest in safer assets like gold. As we look ahead to next week, the focus will be on more earnings reports from major tech companies and the critical employment data that will guide the Fed's decision on interest rates.
In this dynamic and ever-changing market, one thing is clear: investors are navigating a complex landscape with a mix of optimism and caution. As we close out this week, the stage is set for an intriguing next week filled with potential market movers and shakers.
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