Stock Market Update: Friday, Nov. 6, 2020
Wall Street was slightly choppy throughout the session with much of the action leaning towards the downside despite a better-than-expected employment report — and more in Friday’s stock market update. Votes are still being counted for the presidential contest and several key Senate races, prompting a bit of uncertainty ahead of the weekend.
Former Vice President Joe Biden is still holding a slight advantage with control of the Senate now focused on Georgia. Despite the nervousness, the major indexes closed mixed with the small-caps lagging while wrapping up the best week for the market since April.
Stock Market Update
The Nasdaq added 4 points, or 0.04%, with the late-day peak reaching 11,920.
The S&P 500 slipped a point, or 0.03%, after testing an opening low of 3,484.
The Dow dipped 0.2% following the morning pullback to 28,189.
The Russell 2000 fell 1% after settling on the session low of 1,644.
For the week, the Nasdaq skyrocketed 9% while the S&P 500 soared 7.3%. The Russell 2000 jumped 7% while the Dow was higher by 6.9%.
Consumer Staples and Technology were the strongest sectors after rising 0.5% and 0.4%, respectively. Energy was the leading sector laggard for the second-straight session after sinking 2.2%.
Stock Market Movers
CVS Health Corp. (NYSE: CVS) shares rose nearly 6% after reporting solid third-quarter earnings before the opening bell. The company reported a profit of $1.66 a share on revenue of $67 billion versus forecasts of $1.33 a share on revenue of $66.6 billion.
CVS Health CEO Larry Merlo stated “Our strong third quarter results demonstrate continued execution of our long-term strategic plan that is transforming the way health care is delivered. As an integrated health services provider, we’re developing holistic and innovative solutions that meet the needs of our customers in the community, in the home or in the palm of their hand.”
Stock Market Outlook
The third-quarter earnings season is roughly 75% complete and is showing a steadily improving earnings outlook with an above average proportion of companies beating Q3 estimates and expectations for the current Q4 period going up.
For the 364 S&P 500 members that have reported Q3 results already, total earnings are down -7.8% from the same period last year on -2.6% lower revenues, with 86% beating EPS estimates and 78% topping revenue estimates.
Technology sector results have been notably strong, with total Q3 earnings for the 82.4% of the sector’s market capitalization in the index that have reported up 10.3% from the same period last year on 6% higher revenues, with 96% beating EPS estimates and 92% above revenue estimates.
For the Finance sector, Q3 results from 78.4% of the sector’s market capitalization in the S&P 500 index are in the books. Total earnings for these Finance companies are down -8.1% on 0.7% higher revenues, with 73.4% topping EPS estimates and 77% beating revenue estimates.
Looking at the quarter as a whole, total S&P 500 earnings are expected to decline -10.3% on -1.5% lower revenues. The growth picture has been steadily improving since early July, but the pace of improvement has started accelerating as companies have come out with better-than-expected results.
For the current Q4 period, total S&P 500 earnings are expected to be down -11.6% on -0.1% lower revenues.
Global Economy
European markets settled mostly lower.
Germany’s DAX 30 fell 0.7% and the Belgium20 lost 0.6%. France’s CAC 40 declined 0.5% and the Stoxx 600 slipped 0.2%. UK’s FTSE 100 nudged up 0.1%.
Asian markets closed mostly higher.
Japan’s Nikkei rose 0.9% and Australia’s S&P/ASX 200 added 0.8%. Hong Kong’s Hang Seng and South Korea’s Kospi edged up 0.1%. China’s Shanghai dipped 0.2%.
U.S. Economy
Nonfarm payrolls increased by 638,000 with the unemployment rate falling to 6.9%. Economists were looking for a payroll gain of 530,000 and an unemployment rate of 7.7%.
Wholesale Inventories rose 0.4% in September with sales edging up 0.1%. These follow respective August gains of 0.4% and 1.2%. Inventories excluding autos rose 0.3%. The inventory-sales ratio held steady at 1.31.
Baker-Hughes reported the U.S. rig count was up 4 from last week to 300 with oil rigs higher by 5 to 226, gas rigs down 1 to 71, and miscellaneous rigs unchanged at 3. The U.S. Rig Count is down 517 rigs from last year’s count of 817, with oil rigs down 458, gas rigs down 59 and miscellaneous rigs unchanged at 3. The U.S. Offshore Rig Count was down 1 to 12 and down 11 year-over-year.
Consumer Credit rose $16.2 billion in September, rebounding for the -$6.9 billion drop in August. Nonrevolving credit jumped $12.2 billion on the month after the prior $2.8 billion gain. Revolving credit increased $4 billion in September following the -$9.7 billion was -$9.4 billion prior month decline. Q3 credit bounced $24 billion after Q2’s -$58.4 billion slide.
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) fell for the first time in three sessions following the opening fade to $158.94. Prior and upper support at $159-$158.50 was breached but held. A close below the latter would signal a further backtest towards $157.50-$157.
Lowered resistance at $160-$160.50 and the 200-day moving average.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) extended its losing streak to five-straight sessions with the late day low hitting 24.56. Current and upper support at 25-24.50 was breached and held. A close below the latter would indicate additional weakness towards 23.50-23.
Lowered resistance is at 26-26.50 followed by 28.50-29 and and the 50-day moving average.
Stock Market Analysis
The S&P 400 Mid Cap Index (NYSE: MID) had its four session winning streak snapped following the afternoon pullback to 2,023. Fresh and upper support at 2,025-2,000 was breached but held. A close below the latter would likely indicate a retest towards 1,975-1,950.
Resistance from early February is at 2,050-2,075.
RSI (relative strength index) has leveled out with key support at 60 holding. A close below this level would suggest weakness towards 55-50. Resistance is at 65-70.
Sector
The SPDR S&P Retail ETF (NYSE: XRT) fell for the second time in three sessions with the intraday low tapping $53.52. Current and upper support at $54-$53.50 was breached and failed to hold. A close below the latter and would signal additional weakness towards $53.50-$52.
Resistance is at $54.50-$55 with the mid-October all-time peak at $55.26.
RSI is in a slight downtrend with upper support at 55-50 holding. A close below the latter would suggest weakness towards 45-40. Resistance is at 60.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market update.