Stocks Advance As Successful Earnings Season Concludes

Stocks advanced as the earnings beat tally for the 423 S&P 500 companies, which have reported so far, is holding at 75 percent.

Stocks made decent gains on Wednesday as the quarterly earnings reporting season winds down with 75 percent of the 423 reporting S&P 500 companies beating analysts’ estimates. Although both the Dow and S&P 500 advanced, the Nasdaq and Russell 2000 declined. Some significant earnings disappointments raised their ugly heads on Wednesday and more did so after the closing bell.

Tesla (TSLA) sank 14.51 percent to $151.16 on Wednesday, after reporting revenue of $431 million, which fell short of the estimated $535 million.

The Dow Jones Industrial Average (DIA) jumped 128 points to finish Wednesday’s trading session at 15,746 for a 0.82 percent advance. The S&P 500 (SPY) rose 0.43 percent to 1,770.

The Nasdaq 100 (QQQ) retreated 0.10 percent to finish at 3,385. The Russell 2000 (IWM) declined 0.45 percent to 1,098.

In other major markets, oil (USO) jumped 1.54 percent to close at $34.19.

On London’s ICE Futures Europe Exchange, December futures for Brent crude oil declined 27 cents (0.26 percent) to $105.01/bbl. (BNO).

December gold futures advanced $9.60 (0.73 percent) to $1,317.70 per ounce (GLD).

Transports encountered bad weather on Wednesday, as the Dow Jones Transportation Average (IYT) declined 0.69 percent.

In Japan, stocks advanced after news services reported that Toyota Motor Corp Ltd Ord, (TM) would raise its earnings guidance. The reports were confirmed after the closing bell. Toyota shares advanced 0.47 percent in Tokyo. Nissan (NSANY) made a slight recovery after Tuesday’s 10.41 percent nosedive on weak earnings guidance. On Wednesday, Nissan advanced 2.79 percent. The exchange rate for the yen fell to 98.61 per dollar just before Wednesday’s closing bell in Tokyo, after weakening to 98.74 per dollar earlier in the session (FXY). A weaker yen causes Japanese exports to be more competitively priced in foreign markets. The Nikkei 225 Stock Average surged 0.79 percent to 14,337 (EWJ).

In China, declines in the financial and automotive sectors led stocks lower, as investors remained anxious about the economic policy meeting scheduled for November 9-12 in Beijing. The Shanghai Composite Index fell 0.82 percent to 2,139 (FXI). Hong Kong’s Hang Seng Index dipped 0.01 percent to end the day at 23,036 (EWH).

Stocks made decent gains in Europe, as a batch of strong earnings reports helped investors overlook a slightly disappointing Eurozone Composite PMI report from Markit Economics. The October Composite Eurozone PMI dipped to 51.9 in October from September’s 52.2, while beating the flash estimate of 51.5. The Eurozone Services Business Activity Index retreated to 51.6 from September’s 52.2, while beating the flash estimate of 50.9. The Euro STOXX 50 Index finished Wednesday’s session with a 0.67 percent advance to 3,056 – climbing further above its 50-day moving average of 2,931. Its Relative Strength Index is 61.96 (FEZ).

Technical indicators revealed that the S&P 500 remained above its 50-day moving average of 1,705 after finishing Wednesday’s session with a 0.43 percent advance to 1,770. Its Relative Strength Index rose from 63.16 to 65.49. The MACD is on a level trajectory, almost imperceptibly above the signal line, suggesting that the S&P 500 could remain in the 1,770 range during the immediate future.

For Wednesday, all sectors finished in positive territory, except for the consumer discretionary and healthcare sectors.

Consumer Discretionary (XLY): -0.25%

Technology: (XLK): +1.01%

Industrials (XLI): +0.29%

Materials: (XLB): +0.69%

Energy (XLE): +0.30%

Financials: (XLF): +0.46%

Utilities (XLU): +1.36%

Health Care: (XLV): -0.23%

Consumer Staples (XLP): +1.08%

Bottom line: A successful quarterly earnings reporting season is winding down with some big disappointments. On Wednesday, Tesla’s revenue shortfall sent the stock sinking by more than 14 percent. Whole Foods (NASDAQ:WFM) promises to be Thursday’s loser after Wednesday afternoon’s downbeat report.

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