Stocks ended mixed Thursday, with the Dow closing at a fresh record high, following a stronger-than-expected reading for September retail sales and a blowout set of earnings from a key player in the global AI supply chain.
The Dow Jones Industrial Average gained 161.35 points, or 0.37%, to finish the day at record high 43,239.05, while the S&P 500 dipped 0.02% to close at 5,841.47 and the tech-heavy Nasdaq edged up 0.04% to 18,373.61.
“Strong consumer spending in September suggests economic growth in the previous quarter was solidly above trend,” said Jeffrey Roach, chief economist for LPL Financial. “Looking ahead, investors need to monitor any signs that the unemployed are finding it more difficult to earn a paycheck."
"Our baseline remains that the Fed will likely cut a quarter of a percent in both November and December," he added.
Updated at 12:12 PM EDT
Blowing past bonds
Stocks are powering through a big move higher in bond yields this morning, with benchmark 10-year note yields rising to 4.095%, up 5 basis points on the day, following the stronger-than-expected September retail sales report and a pullback in weekly jobless claims.
The S&P 500 was last marked 22 points, or 0.38% higher, after hitting a fresh record high of 5,878.46 points earlier in the session, with the Nasdaq last seen 120 points, or 0.66% higher.
"Looking beyond September’s data, the Hurricanes that devastated swathes of the Southeast in late September and early October are going to be a big drag on releases for October," said Bill Adams, chief economist at Comerica Bank in Dallas. "That will make the economy’s underlying trend harder to read near-term, a problem that will be exacerbated by the Boeing strike."
"But these headwinds are clearly temporary," he added. "With the Fed expected to continue lowering interest rates through the turn of the year, credit-sensitive sectors of the economy should perk up in coming quarters, sustaining the economic expansion into 2025."
Related: Retail sales report tests big Fed rate cut bets
Updated at 11:25 AM EDT
Unhealthy numbers
Elevance Health (ELV) shares plunged in early Thursday trading after the health insurance group posted weaker-than-expected third quarter earnings and cited the “unprecedented challenge” of lower Medicare reimbursements.
Health insurers, including industry giants like UnitedHealth (UNH) and CVS Health (CVS) , are facing the twin headwinds of rising costs, tied to a surge in medical claims, and lower payouts from Medicare and Medicaid under new strictures from the Biden Administration.
Elevance Health shares were last marked 13.2% lower in late-morning trading to change hands at $431.51 each, a move that tips the stock into negative territory for the year.
Elevance Health $ELV is down 13% today on missing EPS estimates and guidance for rising medical costs.
— Dividend Dude (@DividendDude_X) October 17, 2024
This is the same reason we saw UnitedHealth Group $UNH dip but Elevance Health seems substantially cheaper!
It looks very interesting here at 12x earnings… pic.twitter.com/toM6oqgU1u
Updated at 10:01 AM EDT
Nvidia records
Nvidia shares powered higher in early Thursday trading, putting the stock at a fresh all-time high, following a blowout set of third quarter earnings from Taiwan Semiconductor.
Nvidia shares were marked 3.77% higher in early Thursday trading to change hands at $140.57 each after hitting a fresh all-time high of $140.80 earlier in the session.
TSMC shares, meanwhile, surged 11.5% to $209.03 each, extending their 2024 gain past 105%.
Related: Nvidia stock hits record high as key AI player smashes Q3 earnings
Updated at 9:37 AM EDT
Early gains
The S&P 500 was marked 18 points, or 0.32% higher in the opening minutes of trading, while the tech-focused Nasdaq rose 68 points, or 0.38%.
The Dow was marked 126 points higher while the mid-cap Russell 2000 fell 1 point, or 0.06% after hitting an 18-month high at the close last night.
S&P 500 Opening Bell Heatmap (Oct. 17, 2024)$SPY +0.53%🟩$QQQ +0.93%🟩$DJI +0.39%🟩$IWM -0.26%🟥 pic.twitter.com/SL6V5X2zQZ
— Wall St Engine (@wallstengine) October 17, 2024
Updated at 8:45 AM EDT
Shop, no drop
Retail sales powered higher last month, the Commerce Department report, rising 0.4% to a collective total of $714.4 billion that firmly topped Wall Street forecasts but added to concerns over autumn inflation pressures.
Stock futures extended gains following the data release, as traders bet that the solid spending tally supports a soft landing for the world's biggest economy even if it might tame bets on a big Fed rate cut.
A separate data release from the Labor Department showed the number of Americans filing for first time jobless benefits fell by 19,000, the most in three months, to 241,000 over the week ending October 12.
The S&P 500 is called 27 points higher, with the Dow expected to add 80 points from last night's close. The Nasdaq, meanwhile, is called 130 points higher.
Benchmark 10-year Treasury note yields rose 4 basis point to 4.069% following the data release, while 2-year notes were up 4 basis points to 3.993%.
Initial jobless claims down to 241k vs. 258k est. & 260k prior (rev up from 258k); continuing claims at 1.867M vs. 1.865M est. & 1.858M prior (rev down from 1.861M) … greatest increases in GA (+3.1k), NY (+2.5k), and PA (+1.3k); greatest decreases in MI (-7.8k), FL (-3.4k), and… pic.twitter.com/eXxzj3lmIt
— Liz Ann Sonders (@LizAnnSonders) October 17, 2024
Updated at 8:21 AM EDT
ECB rate move
The European Central Bank lowered its benchmark deposit rate by 25 basis points to 3.25% following its two-day meeting in Frankfurt, marking the first set of back-to-back rate cuts in 13 years.
The decision, which was largely anticipated by markets, followed data showing headline inflation in the currency area fell to 1.7% last month, with core pressures easing to 2.7%. The ECB targets a blended inflation rate of "close to but just below 2%."
We cut our key interest rates by 0.25 percentage points.
— European Central Bank (@ecb) October 17, 2024
We did this because incoming data show we are well on track to reach our inflation goal.
Read today’s monetary policy decisions https://t.co/aUqG9kd0zO pic.twitter.com/qsOuo3O1Yp
Stock Market Today
Stocks ended higher on Wednesday, powered in part by big gains in bank and transport stocks and a pullback in Treasury yields, although gains remained capped by political uncertainty tied to a deadlocked U.S. presidential election.
Bond markets are likely to be back in focus again today, as well, with investors looking to navigate a key reading of September retail sales at 8:30 a.m. Eastern time as well as the Labor Department's weekly tally of new jobless claims.
Treasury yields have been moving higher for much of the past two weeks, with some traders citing the impact of policies from both candidates that will both add to the country's record debt and deficits and, in the case of former President Donald Trump, stoke renewed inflation concerns.
Benchmark 10-year Treasury note yield were last marked 3 basis points higher in overnight trading at 4.042% while rate-sensitive 2-year note yields were trading at 3.953%.
Related: Bond markets are heaving as Fed interest rate bets swing
The U.S. dollar index was also moving higher against its global peers, while the euro traded at an 11-week low against the greenback, ahead of today's interest rate decision from the European Central Bank in Frankfurt.
Traders expect the ECB to execute its first back-to-back rate cut in more than a decade as it lowers its benchmark deposit rate by 25 basis points to 3.25% amid slowing growth and fading inflation pressures.
More Wall Street Analysts:
- Analysts update Meta stock price target with Q3 earnings in focus
- Analysts update outlook for Nvidia's Blackwell chips amid AI boom
- Analyst reboots Reddit stock price target ahead of earnings
On Wall Street, stocks are looking at solid early gains, with the S&P 500 called 24 points higher.
The tech-focused Nasdaq, meanwhile, is called 144 points higher, with chip stocks leading the early gains, following a blowout set of third-quarter earnings from Taiwan Semiconductor.
The world's largest contract chipmaker posted record profit of T$325.3 billion (US$10.06 billion) and forecast a 30% growth rate for 2024 revenue, much of it tied to the "very real" demand for AI technologies.
Netflix (NFLX) shares are also in focus as the online streaming giant gets set to post its third quarter earnings update after the closing bell.
Related: Analysts revisit Netflix stock price targets as Q3 earnings loom
In overseas markets, European stocks were higher heading into the ECB rate decision, with the Stoxx 600 rising 0.49% and Britain's FTSE 100 gaining 0.34% in London.
Overnight in Asia, another disappointing government briefing on stimulus plans sent China shares tumbling, with the CSI falling 1.1% and stocks in Shenzhen down 0.73%.
Japan's Nikkei 225, meanwhile, ended the session 0.69% lower as chip stocks slumped prior to the TSMC earnings report.
Related: Veteran fund manager sees world of pain coming for stocks
