Monday, October 22, 2018 – Friday October 26, 2018
On Monday there wasn’t much economic news as financial and energy companies struggled while waiting for earnings season to kick in. In addition to trade issues with China, the killing of a journalist in Saudi Arabia’s Turkish consulate continued to stoke geopolitical worries. However, tech shares were the bright spot, pulling up the Nasdaq composite by .3%.
On Tuesday, markets plummeted early after Caterpillar and 3M released disappointing quarterly results and forecasts. However, losses eased significantly after strong earnings by McDonald’s and Procter & Gamble. The Dow Industrials ended down 125 points and West Texas Intermediate crude fell 4.2% to $66.26 a barrel.
On Wednesday new home sales for September declined 5.4% to an annualized 553,000 units, and the EIA petroleum status report for the week ending October 19th saw reserves jump 6.3 million barrels. The Fed released its Beige Book for September and it wasn’t as strong as recent Fed assessments. Consumer spending was described as modest and manufacturing and wage growth was described as modest to moderate. Investors were worried about the potentially slowing economy, and markets fell sharply with the Dow Industrials losing 608 points, erasing all of its gains for 2018. The Nasdaq Composite fell 4.4% and entered correction territory. Ten year Treasuries’ yield dropped seven basis points to 3.1%.
On Thursday durable goods orders for September rose .8% and jobless claims for the week ending October 20th rose 5,000 to 215,000. The pending home sales index for September rose .5%. Markets roared back after tech companies calmed investors with solid earnings. The Dow Industrials rose 401 points, the S&P 500 gained 1.9%, and the Nasdaq Composite closed 2.95% higher.
On Friday third quarter GDP came in at an annualized 3.5%, slightly higher than expectations, and real consumer spending was up 4%. Markets opened sharply lower on some disappointing quarterly results from the tech sector. Now let’s take a look at some stocks.
Amazon.com, Inc. (NASDAQ: AMZN) on Thursday reported third quarter revenue that fell short of analysts’ estimates. The e-commerce giant said revenue rose 29% to $56.6 billion, however, expectations were $57.1 billion. Net income jumped more than 10 fold to $2.8 billion from $256 million year over year.
Alphabet Inc. (NASDAQ: GOOGL) reported its third quarter financial results on Thursday with revenue increasing 21% to $33.7 billion, missing expectations of $34 billion. Advertising accounted for most of revenue, reaching almost $29 billion. Net income was $9.2 billion, or $13.06 per share.
Microsoft Corporation (NASDAQ: MSFT) reported on Wednesday its quarterly earnings. Total revenue came in at $29.1 billion, beating estimates of $27.9 billion, and revenue growth across the company was strong, especially its cloud segment.
Tesla, Inc. (NASDAQ: TSLA) reported its quarterly financial results and crushed estimates, sending shares 10.2% higher on Thursday. The stronger than expected earnings were due to Tesla’s Model 3 delivery and production, allowing it to return to profitability. Tesla reported revenue of $6.8 billion, increasing almost 129% year over year.
Chipotle Mexican Grill, Inc. (NYSE: CMG) on Thursday reported third quarter results with same-store sales falling short of analysts’ estimates. Revenue increased 8.6% to $1.2 billion and the company said the increase was driven by new restaurant openings and a 4.4% increase in comparable restaurant sales. Net income was $38.2 million, or $1.36 per diluted share.