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October 21, 2016 - US Daily Stock Market Update
Wall Street Ends Choppy Day as Microsoft Hits New High, GE Slumps By The Street
A choppy afternoon of trading ended with stocks narrowly mixed as Microsoft (MSFT) pulled markets in one direction and General Electric (GE) in the other.
The S&P 500 declined by 0.01%, the Dow Jones Industrial Average fell 0.09%, and the Nasdaq rose 0.30%.
Microsoft hit a new, all-time high of $59.68 after topping earnings and revenue estimates in its recent quarter. Its previous high of $58.72 was reached in December 1999. The tech giant earned 76 cents a share over the first quarter, 8 cents above estimates. Revenue climbed 3% to $22.3 billion, exceeding sales forecasts by $590 million. Azure revenue rose 116%, improved from the fourth quarter's 102%, as Microsoft continues gaining public cloud services share.
General Electric moved slightly lower following disappointing third-quarter sales. The industrial company reported a 4% increase in revenue to $29.3 billion, missing estimates of $29.6 billion as results in its aviation and power businesses fell short of expectations. GE also narrowed its full-year earnings outlook to $1.48 to $1.52 a share from $1.45 to $1.55 a share.
"This is a story that requires patience, as the company shifts toward a digital-industrial focus over the next couple of years," Jim Cramer and Jack Mohr, co-portfolio managers for Cramer's Action Alerts PLUS charitable trust portfolio, wrote in a note. Action Alerts Plus holds GE.
In other earnings news, McDonald's (MCD) added 3% after exceeding third-quarter earnings and sales estimates. Earnings of $1.50 a share came in 2 cents higher than expected, while revenue of $6.42 billion bested consensus of $6.28 billion. Global same-restaurant sales rose 3.5%, while U.S. sales increased 1.3%.\
PayPal (PYPL) soared by 10% after meeting analysts' expectations in its third quarter. The payments site earned 35 cents a share, in line with estimates, on revenue of $2.67 billion. Sales climbed 18.1% as the number of active customer accounts rose 11% to 192 million. PayPal anticipates fourth-quarter sales growth of 14% to 17%, or 16% to 19% when excluding currency fluctuations.
Honeywell (HON) reported a mixed quarter, topping earnings but falling short on sales. The defense company earned an adjusted $1.67 a share over its third quarter, above estimates of $1.60 a share. Revenue increased 2% to $9.611 billion, but missed estimates of $9.786 billion. Honeywell CEO David Cote said the company is on track to achieve double-digit earnings growth in its current quarter.
Skechers (SKX) slumped 17% Friday after missing third-quarter estimates and guiding for a below-consensus fourth quarter. The shoe company earned 42 cents a share, down a penny from a year earlier and below consensus of 48 cents a share. Revenue of $942.4 million also fell short of estimates of $954 million. Skechers anticipates fourth-quarter sales no higher than $735 million, far from estimates of $800 million.
Schlumberger (SLB) was lower after reporting a mixed third quarter. Per-share earnings of 25 cents a share exceeded estimates by 3 cents, while revenue of $7.02 billion missed by $60 million. Sales dropped just more than 17% as low oil prices continued to beat up the industry.
Crude oil fluctuated, pulling higher earlier in the session before returning to the red, as comments from Russia spurred production cut talk. Russian energy minister Alexander Novak reportedly underscored the need for a group effort among the world's biggest oil producers to correct a supply glut. Novak is set to meet with Mohammad Barkindo, the Secretary General of the Organization of the Petroleum Countries, on Monday.
The number of active oil rigs in the U.S. rose in the past week, a move in the wrong direction for commodity traders worried about domestic and international oversupply. The number of active oil rigs rose by 11 to 443 in the past week, according to Baker Hughes data.
West Texas Intermediate crude closed 0.49% higher at $50.88 a barrel on Friday.
San Francisco Federal Reserve President John Williams reiterated the case for gradual rate increases in a speech to the Federal Home Loan Bank of San Francisco on Friday afternoon. Williams said the central bank should hike "preferably sooner rather than later" and said it "makes sense to get back to a pace of gradual rate increases." Analysts largely expect the next rate increase in December.
In deals news, Reynolds American (RAI) surged after British American Tobacco (BTI) offered to acquire the 58% of the company it does not already own. British American Tobacco offered $47 billion in cash and stock, a deal which values Reynolds at a 20% premium to its Thursday close. A deal would create the world's largest publicly-traded tobacco company.
Time Warner (TWX) jumped by 7% on Friday on reports AT&T (T) is interested in an acquisition of the media company. Executives at both companies are reportedly in negotiations and a deal could be announced as soon as this weekend.
Qualcomm (QCOM) and NXP Semiconductors (NXPI) have reportedly struck a deal after months of negotiations. The two have agreed on a deal for Qualcomm to buy NXP for $110 a share, which is at the low end of a previous range of $110 to $120 a share analysts had expected.
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Track 'n Trade LIVE Futures Webinar / October 24
CandleChart's Steve Nison Stock Market Strategy Webinar / October 24
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Dr. Van Tharp Day Trading Systems Workshop / October 28 to 30 Cary North Carolina
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