The stock market settled lower following the start of the third-quarter earnings season — and more in Tuesday’s stock market update. Citigroup Inc. (NYSE: C) and JPMorgan Chase & Co. (NYSE: JPM) reported better-than-expected headline earnings while Delta Air Lines Inc. (DAL) reported worse-than-expected losses and adjusted revenue.
The Russell 2000 was down 0.7% following the morning pullback to 1,631.
The S&P 500 declined 0.6% after testing a low of 3,500.
The Dow also fell 0.6% with the intraday low tagging 28,604.
The Nasdaq slipped 0.1% despite the first half peak reaching 11,946 (see why Josh Martinez isn’t trading the Nasdaq right now).
Communication Services was the only sector that showed strength after rising a meager 0.2%. Financials and Real Estate paced sector laggards after sinking 2% and 1.7%, respectively.
Loop Industries Inc. (Nasdaq: LOOP) shares tanked 32% after Hindenburg Research published a short report that it sees 100% downside risk for the stock. Specifically, Hindenburg Research claims Loop Industries is smoke and mirrors with no viable technology while adding they expect Loop will never generate any meaningful revenue.
The major indexes continue to work their way towards fresh all-time highs despite a lackluster session. The Nasdaq and S&P 500 are approaching September peaks and the Dow and the Russell 2000 are making a run at prior record highs from February.
All of the major indexes are trading well above their 50-day moving averages and remain in a strong uptrend. Additionally, relative strength indicators are at reasonable levels, meaning they are not overbought. The one wild card remains volatility, as it is giving a neutral reading and was slightly elevated throughout Tuesday’s session.
This could change as the week progresses but the recent failure to clear and hold key support levels keeps stock market risk over the near-term slightly elevated.
European markets closed lower despite UK sales rising 5.6% last month compared with the same period a year ago.
The Belgium20 sank 1.9% and Germany’s DAX 30 dropped 0.9%. France’s CAC 40 and the Stoxx 600 were off 0.6% while UK’s FTSE 100 fell 0.5%.
Asian markets were mostly higher with Hong Kong’s Hang Seng halted by a tropical storm.
Australia’s S&P/ASX 200 rallied 1% and Japan’s Nikkei edged up 0.2%. China’s Shanghai was up just over a point, or 0.04%. South Korea’s Kospi slipped a half-point, or 0.02%
China’s imports surged 13.2% in September, well above forecasts for a rise of 0.3%. Exports rose 9.9% from a year ago, just below expectations of 10%.
The NFIB Small Business Optimism Index climbed 3.8% to 104 in September, versus August’s 1.4% bounce to 100.2. Strength was broad-based (nine of 10 components improved) with the percentage of firms expecting a better economy rising from 24% to to 32%. Expectations of higher selling prices increased to 13% from 1%, with expectations for higher sales up at 8% from 3%.
The Consumer Price Index rose 0.2% in September, as expected. There were no revisions to the 0.4% gain in August. The increase saw the 12-month rate edge up to 1.4% year-over-year versus 1.3%, and hold steady at 1.7% year-over-year. Energy prices edged up 0.8% versus 0.9% previously. Transportation prices climbed another 1% from 1.3%. Part of the strength was in used car prices, which surged 6.7% on the month.
Food/beverage costs were unchanged after the prior 0.1% gain. Housing costs were up 0.2% again, as they were in August. Medical care costs were flat after inching up 0.1% previously. Apparel prices declined 0.5% from 0.6%, while education costs dipped 0.2% following August’s 0.1% gain. Real average weekly earnings rose to a 4.1% year-over-year clip versus 3.8% previously.
Chain store sales increased 0.4% in the first two weeks of October, after an unchanged print in the first week. Sales were up 1.2% year-over-year versus the same week last year. For October, the monthly pace accelerated to a 1.2% year-over-year rate versus 0.9% previously.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) was up for the second straight session after surging to a late-day peak of $161.83. Prior and lower resistance at $161.50-$162 was reclaimed. A close above the latter would be a bullish signal for additional upside towards $162.50-$163.
Rising support is at $160.50-$160 followed by $159-$158.50 and the 200-day moving average.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for the second straight session with the intraday high reaching 26.93. Resistance at 25.50-26 and the 50-day moving average was breached and levels that failed to hold. A move above 27.50 would signal a retest towards 29.50-30 and the 200-day moving average.
Support remains at 24.50-24.
The SPDR S&P 500 ETF (NYSEArca: SPY) fell for the first time in five sessions after bottoming out at $349.09. Fresh and upper support at $349.50-$349 was tripped but held. A close below the latter would indicate additional weakness towards the $347.50-$347 area.
Lowered resistance is at $352.50-$353 followed by $354.50-$355.
RSI is rolling over with key support at 60 holding. A close below this level would signal weakness towards 55-50. Resistance is at 65-70.
The Energy Select Sector SPDR Fund (NYSEArca: XLE) fell for the second time in three sessions with the afternoon low tapping $30.30. Near-term and upper support at $30.50-$30 was breached and failed to hold. A close below the latter would be a renewed bearish development for additional selling pressure towards $29-$28.50 with the monthly low at $28.20.
Resistance at $31-$31.50. A close above the $32 level would be a more bullish signal of a near-term bottom.
Check back after the closing bell each day for the most important news and numbers in the WealthPress stock market update.