Stocks trade mixed, Dow pulls back from record as earnings roll in

Stocks were mostly higher on Thursday, with the S&P 500 rising to log an all-time high as a parade of strong earnings results and economic data helped buoy equity prices.

The S&P 500 gained 0.3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to reach record intraday and closing highs, led by outperformance in the consumer discretionary and information technology sectors. A better-than-expected report on new weekly jobless claims also helped boost risk assets, with these improving to a fresh pandemic-era low. The Dow dipped but came off session lows. The 30-stock index had set a fresh record intraday high during the regular trading day on Wednesday, marking its first all-time high since mid-August. 

Netflix and Tesla also logged record highs on Thursday, helping pull the tech-heavy Nasdaq up by 0.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. 

Bitcoin prices (BTC-USD) pulled back from an all-time high of $66,000 reached earlier on Wednesday.

Estimates-topping earnings results from companies from Verizon (VZ) to Anthem (ANTM) and Abbott Laboratories (ABT) extended a streak of strong quarterly reports kicked off by the big banks last week. Tesla (TSLA) shares pushed higher after the electric-vehicle maker posted profits that exceeded estimates on the back of record quarterly deliveries, though revenues fell short.

With stocks trading near record levels, these kinds of earnings beats will need to be maintained in order to fuel further appreciation, some strategists said.

“Both the fiscal stimulus and monetary stimulus has been driving markets really since the ricochet off the bottom of COVID,” Michael Vogelzang, chief investment officer for Captrust, told Yahoo Finance Live on Wednesday. “What we’re looking at now is, the easy work is done. The Fed is beginning to taper shortly, we expect. We don’t expect interest rates to rise much from here. But what it means is that the market is reasonably valued. It’s not cheap by anyone’s estimation. And in order to progress here … we’re going to have to see stronger earnings growth, and continued strong earnings growth.”

“We’ve seen the peak cycle acceleration,” he added. “Now it’s the hard work – can we continue to create profit growth in our various companies? Can the market and the economies around the globe work through some of the logistical issues?”

So far this earnings season, many goods-producing companies have highlighted concerns over rising input prices and ongoing supply chain disruptions. Tesla noted in its earnings release that “a variety of challenges, including semiconductor shortages, congestion at ports and rolling blackouts, have been impacting our ability to keep factories running at full speed.” And Procter & Gamble (PG) earlier this week estimated it would see over $2 billion in expenses this fiscal year related to rising commodity and freight costs. 

However, investors have so far at least momentarily looked through these concerns, and clutched to optimism that these pressures will prove temporary.

“What we have done, in large part, by having massive aggregate demand outpacing aggregate supply is likely not destroyed demand. We likely delayed demand,” Art Hogan, chief market strategist at B Riley-National, told Yahoo Finance Live on Wednesday. “And I think that elongates the economic cycle into ’22.”

“It means we’re going to have above-mean economic growth or GDP growth in ’22, higher than we’re estimating right now, likely, as we start seeing some of that supply response come online,” he added. “I certainly think that when we look at those companies that have to discuss things like margin degradation because of supply chain logistics and not having pricing power, you’re definitely going to have that environment where you have winners and losers.”

4:04 p.m. ET: S&P 500 logs record as Netflix, Tesla set new all-time highs 

Here’s where the major indexes closed out the session on Thursday:

  • S&P 500 (^GSPC): +13.59 (+0.3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 4,549.78

  • Dow (^DJI): -6.26 (-0.02{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 35,603.08

  • Nasdaq (^IXIC): +94.02 (+0.62{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,215.70

2:12 p.m. ET: It’s still an ‘equity friendly’ investing environment for stocks: Strategist

Even as concerns over inflation and the global economic outlook remain at the forefront of investors’ attention, the overarching backdrop for equities remains strong due to two key factors, according to at least one strategist. 

“We’re continuing to believe that we’re in what we’re calling an ‘equity friendly’ investing environment. We’re right in the middle of earnings … and two key drivers to the market are always earnings and interest rates,” Leo Grohowski, BNY Mellon chief investment officer, told Yahoo Finance Live. “Coming into the third quarter, we had a lot of [earnings] warnings. In fact we had the third-highest warnings of any quarter in the last 10 years. So I think expectations were measured. And so far, with about 20{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of the [S&P 500] companies in, we’re running about 80{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} better than expected. So earnings we believe will continue to move forward at a nice clip.”

“And the key is interest rates. Our thought has been the 10-year doesn’t get higher than maybe 1.75{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, 2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} by the end of the year,” he added. “That supports market multiples at around the 23 level … [getting] us to a market forecast of 4,600 to 4,700 this year. So we’re continuing to be constructive on the equity market based on the earnings and interest rate market.” 

10:00 a.m. ET: Existing homes sales bounced back in September, jumping far more than expected 

Existing home sales rebounded in September after a dip in August, jumping by the most in a year as demand for housing remained robust. 

Sales of previously owned homes were up 7{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in September month-on-month, the National Association of Realtors (NAR) said in a new report Thursday. This was the biggest leap since September 2020, and brought sales to a seasonally adjusted annual rate of 6.29 million units. Consensus economists were looking for an only 3.7{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} rise in September, according to Bloomberg data. In August, existing home sales had dropped by 2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in their first decline since May. 

“Some improvement in supply during prior months helped nudge up sales in September,” Lawrence Yun, NAR’s chief economist, said in a press statement. “Housing demand remains strong as buyers likely want to secure a home before mortgage rates increase even further next year.”

9:51 a.m. ET: WeWork opens at $11.28 per share after hitting public markets via SPAC merger 

Co-working company WeWork opened for trading at $11.28 per share after making its public debut via a merger with the special-purpose acquisition company BowX Acquisition Corp. The combined company is now trading under the ticker “WE” on the New York Stock Exchange. The SPAC had closed Wednesday at $10.38 per share. 

The listing comes after a series of stumbles for WeWork, which resulting in the ousting of its co-founder Adam Neumann after a failed attempt to go public via a traditional initial public offering in 2019. The SPAC merger gives the company a valuation of about $9 billion, versus an as much as $47 billion valuation after a an investment by SoftBank in the private markets. 

9:32 a.m. ET: Stocks open slightly lower 

Here’s where markets were trading just after the opening: 

  • S&P 500 (^GSPC): -3.92 (-0.09{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 4,532.27

  • Dow (^DJI): -42.63 (-0.12{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 35,566.71

  • Nasdaq (^IXIC): -6.73 (-0.04{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,114.95

  • Crude (CL=F): -$0.45 (-0.54{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $82.97 a barrel

  • Gold (GC=F): -$1.90 (-0.11{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,783.00 per ounce

  • 10-year Treasury (^TNX): +2.1 bps to yield 1.656{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

8:33 a.m. ET: New weekly jobless claims set fresh pandemic-era low, dropping to 290,000

Initial unemployment claims improved to their lowest level since March 2020 last week, as the number of firings and other voluntary separations slowed amid widespread labor shortages. 

Weekly unemployment claims totaled 290,000 during the week ended Oct. 16, the Labor Department’s data showed on Thursday. The prior week’s jobless claims were upwardly revised slightly to 296,000 from the 293,000 previously reported.

Continuing jobless claims for the week ended Oct. 9 also came in at their lowest level since March of last year. These unexpectedly broke below 2.5 million for the first time since the start of the pandemic, totaling 2.481 million.

7:25 a.m. ET Thursday: Stock futures give back some gains after Dow’s record-setting session 

Here’s where markets were trading Thursday morning: 

  • S&P 500 futures (ES=F): -12 points (-0.27{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 4,516.00

  • Dow futures (YM=F): -104 points (-0.29{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 35,373.00

  • Nasdaq futures (NQ=F): -34.25 points (-0.22{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,343.25

  • Crude (CL=F): -$0.65 (-0.78{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $82.77 a barrel

  • Gold (GC=F): -$3.40 (-0.19{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,781.50 per ounce

  • 10-year Treasury (^TNX): +2.6 bps to yield 1.661{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}

6:05 p.m. ET Wednesday: Stock futures edge lower

Here’s where markets were trading Wednesday evening: 

  • S&P 500 futures (ES=F): -2.25 points (-0.05{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 4,525.75

  • Dow futures (YM=F): -30 points (-0.08{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}), to 35,447.00

  • Nasdaq futures (NQ=F): -18 points (-0.12{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,359.5

NEW YORK, NEW YORK - SEPTEMBER 30: Traders work on the floor of the New York Stock Exchange (NYSE) on September 30, 2021 in New York City. In afternoon trading the Dow was down over 250 points as investors continue to worry about inflation, wages and supply chain issues. (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – SEPTEMBER 30: Traders work on the floor of the New York Stock Exchange (NYSE) on September 30, 2021 in New York City. In afternoon trading the Dow was down over 250 points as investors continue to worry about inflation, wages and supply chain issues. (Photo by Spencer Platt/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

Christopher Lewis

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