US close: Corporate earnings, M&A help to prop up shares

Stocks finished on a mixed note, with generally upbeat corporate earnings and an unusual late-week flurry of M&A news helping the main market averages to recover from an initial drop at the start of trading.

Corporate giants McDonald’s and Honeywell International pleased investors with their latest updates, with GE sounding a discordant note after it cut its full-year sales view.

The Dow Jones Industrial Average drifted lower by 0.19% or 16.64 points to 18,145.71, the S&P 500 was off marginally, by -0.01% or 0.18 points at 2,141.16 while the Nasdaq Composite rose 0.30% to 5,257.40.

For the week as a whole the S&P 500 was up by 0.4%.

Connor Campbell, a financial analyst at Spreadex, said the Dow Jones Industrial Average dropped 100 points after the bell, due to the “increasing certainty that Hilary Clinton will be elected the next president of the United States come December and the subsequent strength this has leant the dollar, which took 0.3-0.5% off both the pound and the euro”.

Earnings at the 116 S&P 500 components which had reported thus far were up 3.8% year-on-year, leading analysts to revise their forecast for average earnings growth for the third quarter to flat, marking a break in the five-quarter long stretch of shrinking profits.

However, some market commentary highlighted how that was coming against a backdrop of unusually few companies willing to provide guidance.

Speaking to reporters, the president of the Federal Reserve Bank of San Francisco, John Williams, reportedly said "this year would be good" for a rate rise.

He did not disagree with recent remarks from Fed chair Janet Yellen that allowing the economy to run a little hot might help undo some of the damage from the past financial crisis.

Nevertheless, allowing the rate of unemployment from 5% to 4% might force too quick a shift on rates by the Fed at some point down the road, with potentially troublesome consequences for the economy, he added.

In 2017, he reportedly said it would make sense for the central bank to tighten rates a few more times.

Oil prices nudged higher as Russia said it was committed to joining an OPEC-led production cut. However, late in the session Baker Hughes reported an 8th consecutive weekly increase in the number of onshore US oil rigs, by 11 to 443, versus 594 one year ago.

West Texas Intermediate crude oil futures advanced 19 cents to $50.85 a barrel on the ICE.

Shares in fast-food giant McDonald's finished up by 3.04% after it posted third quarter revenue of $6.42bn before the opening bell, which was down from last year, but exceeded estimates of $6.28bn.

Net income was $1.28bn, or $1.50 a share, down from $1.31bn, or $1.40 per share, for the same third quarter.

General Electric’s shares were down 0.31% by the closing bell on Wall Street after the industrialist was forced to cut its sales growth forecast for the year due to falling demand in a sluggish economy.

Profit for the third quarter rose 6.7%, but revenue missed on analyst expectations for revenue, which was $29.27bn, short of $370m, but was an 4.4% increase from the same quarter last year.

Conglomerate Honeywell International reported better-than-expected third quarter earnings but weak sales.

Sales rose 2% to $9.61bn, missing analysts’ expectations of $9.78bn as net income was $1.24bn, or $1.60 earnings per share, down from $1.26bn or $1.62, last year.

Stock in tobacconist Reynolds American soared 14% after British American Tobacco said it intends to buy the remaining stake in the company it does not own.

From a sector stand-point the best performance was seen in the following industrial groups: Tobacco (3.32%), Software (1.92%) and Financial Administration (1.60%).

Dow Jones - Risers

Microsoft Corp. (MSFT) $59.66 4.21%
McDonald's Corp. (MCD) $113.93 3.04%
Walt Disney Co. (DIS) $93.03 1.09%
American Express Co. (AXP) $67.36 0.87%
Coca-Cola Co. (KO) $42.13 0.48%
E.I. du Pont de Nemours and Co. (DD) $69.70 0.35%
JP Morgan Chase & Co. (JPM) $68.49 0.34%
Home Depot Inc. (HD) $126.60 0.28%
Unitedhealth Group Inc. (UNH) $145.37 0.21%
Goldman Sachs Group Inc. (GS) $174.67 0.09%

Dow Jones - Fallers

Verizon Communications Inc. (VZ) $48.20 -1.91%
International Business Machines Corp. (IBM) $149.63 -1.25%
Johnson & Johnson (JNJ) $113.44 -1.24%
Merck & Co. Inc. (MRK) $61.20 -1.16%
Pfizer Inc. (PFE) $32.18 -1.11%
Travelers Company Inc. (TRV) $108.35 -1.07%
Intel Corp. (INTC) $35.15 -0.79%
Procter & Gamble Co. (PG) $84.33 -0.71%
Exxon Mobil Corp. (XOM) $86.62 -0.68%
United Technologies Corp. (UTX) $98.67 -0.62%

S&P 500 - Risers

Reynolds American Inc. (RAI) $53.78 14.01%
Paypal Holdings Inc (PYPL) $44.15 10.13%
Time Warner Inc. (TWX) $89.48 7.82%
VeriSign Inc. (VRSN) $81.56 6.53%
E*TRADE Financial Corp. (ETFC) $29.50 4.61%
Rockwell Automation Inc. (ROK) $122.99 4.22%
Microsoft Corp. (MSFT) $59.66 4.21%
Synchrony Financial (SYF) $28.23 4.05%
CF Industries Holdings Inc. (CF) $25.92 3.76%
Crown Castle International (CCI) $94.92 3.69%

S&P 500 - Fallers

Southwestern Energy Co. (SWN) $11.59 -8.38%
Moody's Corp. (MCO) $102.24 -5.41%
Cerner Corp. (CERN) $58.46 -4.16%
Range Resources Corp. (RRC) $37.20 -3.60%
Chesapeake Energy Corp. (CHK) $6.68 -3.33%
Cabot Oil & Gas Corp. (COG) $21.37 -3.13%
Schlumberger Ltd. (SLB) $80.47 -3.04%
Varian Medical Systems Inc. (VAR) $97.25 -3.03%
Biogen Inc (BIIB) $290.65 -3.01%
AT&T Inc. (T) $37.49 -3.00%