FYI: The S&P 500 struggled to find direction Thursday, as investors contended with a mixed bag of corporate profit reports that offered a murky outlook on the state of the U.S. economy.
The broad index bobbed around the flatline throughout Thursday’s session. The tepid move obscured bigger swings in shares of individual companies that reported quarterly earnings late Wednesday and Thursday morning. So far, the gains and losses piled up to leave the S&P 500 a hair above where it was a day earlier.
On one end, shares of Twitter, 3M, Ford and eBay all suffered steep declines after reporting disappointing earnings, weighing on the S&P 500. On the other end, shares of PayPal Holdings, Microsoft and semiconductor company Lam Research LRCX +13.06% notched solid gains after topping Wall Street’s expectations.
The problem for investors is that the latest earnings reports likely did little to shore up confidence in the U.S. economy, giving them few incentives to broadly buy stocks, analysts said. Growth is clearly weakening, as companies including Ford and 3M deal with the ongoing effects of the U.S.’s trade war against China.
And although most companies in the S&P 500 have topped analysts’ expectations so far, the beats haven’t been that impressive, said Larry Adam, chief investment officer at Raymond James & Associates. Companies on average have beaten estimates by about 2.9%, Mr. Adam said, below the near 5% average of recent years.
On Thursday, the S&P 500 added 0.19% , as technology stocks within the broad index jumped more than 1% following the upbeat earnings. The Nasdaq Composite added 0.81%, while the Dow Jones Industrial Average continued to underperform broader benchmarks, falling 28 points, or 0.2%, to 26805 in recent trading.
Shares of 3M fell 4.3%, dragging the Dow industrials firmly lower in early-morning trading. The industrial conglomerate posted lower quarterly sales in some of its core divisions and cut its earnings forecast for the rest of the year.
Twitter dropped 19% after the social-media company’s third-quarter earnings fell short of expectations. Its fourth-quarter revenue forecast also disappointed the market.
EBay also fell, shedding 8.9%, after the online marketplace forecast its first quarterly revenue decline in four years. Ford shares dropped 6.6% after the car maker lowered its profit target for the year, sparking worries that a broad restructuring at the company isn’t succeeding in driving earnings growth.
And Baxter International declined 9.1% after the health-products company said it may need to restate results for at least five years.
Some of those losses were offset by companies that reported more upbeat results.
Microsoft reported late Wednesday stronger-than-expected earnings and revenue, in part due to the company’s bet on cloud computing. Shares jumped 2.2%
PayPal, meanwhile, said results for its latest quarter topped expectations, sending shares up 8.3%, putting it among the S&P 500’s strongest performers.
Shares of Tesla, which isn’t in the S&P 500, posted a big gain after the electric-car maker surprised investors by reporting a profit for the third quarter, allaying fears that it was prioritizing growth and production over profit. Shares climbed 16%.
About a third of the companies in the S&P 500 have reported earnings so far, and 81% of those reports have topped expectations, according to FactSet. But analysts still estimate the broad index is on pace to see a quarterly earnings contraction of 4.1% from a year earlier.
Online retail giant Amazon.com is due to report earnings after the closing bell, along with Intel and Visa.
Elsewhere, the Stoxx Europe 600 index rose 0.6%, its fourth consecutive session of gains, after the European Central Bank decided to leave interest rates unchanged and stuck with a plan to start buying bonds next month.
Regards,
Ted
Bloomberg Evening Briefing:
https://www.bloomberg.com/news/articles/2019-10-24/your-evening-briefingMarketWatch:
https://www.marketwatch.com/story/stock-market-set-to-climb-toward-records-on-busiest-day-of-earnings-season-2019-10-24/printWSJ:
https://www.wsj.com/articles/global-stocks-tick-up-amid-central-bank-decisions-earnings-11571908002Bloomberg:
https://www.bloomberg.com/news/articles/2019-10-23/stock-futures-climb-in-asia-as-earnings-roll-in-markets-wrap?srnd=premiumIBD:
https://www.investors.com/news/technology/amazon-earnings-third-quarter-stock/CNBC:
https://www.cnbc.com/2019/10/24/dow-futures-busiest-day-of-the-earnings-season.htmlReuters:
https://www.reuters.com/article/us-usa-stocks/sp-500-edges-higher-on-mix-of-earnings-reports-tech-shines-idUSKBN1X31IJU.K:
https://uk.reuters.com/article/uk-britain-stocks/ftse-100-heads-for-best-weekly-performance-in-nine-months-idUKKBN1X30OVEurope:
https://www.reuters.com/article/us-europe-stocks/earnings-relief-spurs-gains-in-europe-with-no-surprises-from-draghis-last-act-idUSKBN1X30PDAsia:
https://www.cnbc.com/2019/10/24/asia-stocks-oct-24-south-korea-gdp-ecb-meeting-oil-and-currencies.htmlBonds:
https://www.cnbc.com/2019/10/23/us-bonds-treasury-yields-in-focus-amid-economic-data-auctions.htmlCurrencies:
https://www.cnbc.com/2019/10/24/forex-market-brexit-us-china-trade-in-focus.htmlOil
https://www.cnbc.com/2019/10/24/oil-markets-demand-outlook-in-focus.htmlGold:
https://www.cnbc.com/2019/10/23/gold-markets-brexit-trade-war-in-focus.htmlWSJ: Markets At A Glance:
https://markets.wsj.com/usMajor ETFs % Change:
https://www.barchart.com/etfs-funds/etf-monitorSPDR's Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-trackerSPDR's Bloomberg Sector Performance Pie Chart:
https://www.bloomberg.com/markets/sectorsCurrent Futures:
https://finviz.com/futures.ashx 
