Monday October 23, 2017 - Friday October 27, 2017
On Monday, investors prepared for a busy week with many companies reporting earnings. Even though earnings season has been good thus far, GE disappointed last week and it continued to fall, dragging down the overall market.
On Tuesday, the PMI composite flash for October rose 1.1 points to 55.7, a nine-month high. Major U.S. manufacturers had quarterly reports that exceeded analysts’ expectations, pushing the Dow Industrials to a record high.
On Wednesday, durable goods orders for September rose 2.2% on top of the prior month’s 1.7% gain. New home sales for September surged almost 19% to an annualized 667,000 units and the EIA petroleum status report for the week ending October 20th saw crude oil inventory increase by 900,000 barrels. Despite the good news, markets were slammed as Chipotle Mexican Grill reported disappointing results and Advanced Micro Devices revised its next quarter’s guidance lower. Ten year Treasuries fell to yield 2.43%, West Texas Intermediate crude fell slightly to close at $52.21 a barrel, and the Dow Industrials dropped 112 points.
On Thursday, the pending home sales index for September was flat for the month, compared to the previous month’s 2.8% decline, and jobless claims for the week ending October 21st rose 10,000 to 233,000. The Dow Industrials rose 71 points as earnings reports gave investors some optimism.
On Friday, GDP for the third quarter came in at 3.0%, higher than expectations, as businesses increased inventories and the trade deficit declined. Markets opened higher on the good news, including better than expected earnings in shares of major tech companies. Now let’s take a look at some stocks.
McDonald's Corporation (NYSE: MCD) announced its third quarter results, with revenue beating estimates but earnings slightly missing. Revenue fell 10% to $5.8 billion, beating estimates of $5.7 billion. The company said that the decrease was due to charges related to a refranchising initiative. Same-store sales in the United States were up 4.1% for the third quarter, which were better than the expected 3.6% growth.
Chipotle Mexican Grill’s (NYSE: CMG) shares fell by 14% early Wednesday after the company reported results that missed expectations. Earnings were $0.64 per share, after subtracting out $0.77 per share associated with charges due to data security incidents as well as Hurricane Harvey and Irma. Chipotle Mexican Grill reached a new 52-week low of $270 per share on Thursday.
Twitter, Inc.’s (NYSE: TWTR) shares surged over 13% on Thursday after the social media company beat estimates for its third quarter earnings. Jack Dorsey, CEO, said progress was made growing their audience, returning to revenue growth, and achieving record profitability. Average daily users grew 14% year over year.
Amazon.com, Inc. (NASDAQ: AMZN) announced late Thursday financial results for its third quarter. Operating cash flow increased 14% to $17.1 billion, compared to $15.0 billion a year ago. Net sales increased 34% to $43.7 billion, compared to $32.7 billion a year ago.
Alphabet Inc. (NASDAQ: GOOGL) announced third quarter results with revenues up 24% year over year, showing strength across Google’s business lines. Cost-per-click on Google properties was down 21% from a year ago, and traffic acquisition costs were 23% of ad revenue compared to 21% a year ago.
Microsoft Corp. (NASDAQ: MSFT) announced third quarter results with an increase of revenue of 12% to $24.5 billion as well as an operating income increase of 15% to $7.7 billion. Satya Nadella, CEO, stated that increased usage and engagement by customers across Microsoft’s business lines helped bring the positive results.