The S&P 500 secured new records on Thursday, Sept. 28, in a session in which third-quarter growth concerns surfaced and consumer stocks did the heavy lifting.
The S&P 500 was up 0.12% to 2,510, a mere 2 points over the last record set on Sept. 20. The Dow Jones Industrial Average was up 0.18%, while the Nasdaq was flat.
Consumer staple stocks were among the best performers on Thursday. McDonald's Corp. (MCD) , Home Depot Inc. (HD) and Coca-Cola Co. (KO) led the Dow higher. Anheuser-Busch InBev NV (BUD) , PepsiCo Inc. (PEP) and Diageo PLC (DEO) also posted gains. McDonald's rose after Longbow Research upgraded its rating to buy from neutral. The firm expressed confidence that comparable sales for its third quarter would come in above analysts' estimates.
Media and telecom stocks were the biggest weight on the Nasdaq on Thursday. Comcast Corp. (CMCSA) , Twenty-First Century Fox (FOXA) , Discovery Communications Inc. (DISCA) and Viacom (VIAB) were the worst performers.
Wall Street weighed second-quarter growth against the potential for a weaker third quarter. The U.S. economy grew at a pace of 3.1% in the second quarter, its fastest growth in more than two years, according to the final estimate of gross domestic product released Thursday. Previous estimates put growth at 3% and economists expected the reading to remain unchanged. Higher GDP was mostly tied to farm inventories. Consumer spending growth held at 3.3%.
But the effect of Hurricanes Harvey, Irma and Maria could put a dent in the July-September quarter.
"Keep in mind that these are Q2 estimates, and a whole lot has happened in just a few short weeks," said Mike Loewengart, vice president of investment strategy at E*Trade. "It stands to reason that the devastation of the recent hurricanes could weigh heavy when the Q3 estimates come in, and many question how sustainable the 3% threshold is."
Estimates have third-quarter GDP growth at 2.5%, according to FactSet. An initial estimate will be published on Oct. 27.
Companies are already tempering expectations for quarterly performances in the wake of hurricane devastation. Pier 1 Imports Inc. (PIR) tumbled 10% after issuing a muted outlook for the full year. Pier 1 expects GAAP earnings of 31 cents to 41 cents a share, below analysts' target of 46 cents. The company revised its guidance to "reflect the anticipated impact of Hurricane Harvey and Irma" on its third-quarter results.
The furniture retailer reported a loss of 10 cents a share, double a year earlier. An adjusted loss of 5 cents a share beat by a penny. Comparable-store sales increased 1.8%, outpacing an expected 0.7%.
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Sherwin-Williams Co. (SHW) also expects the recent hurricanes to impact its third quarter. More than 600 stores were affected by the weather patterns and tens of stores in the Caribbean remain closed. The paint company expects the disruptions to reduce overall third-quarter revenue by $50 million to $70 million. Earnings guidance was also cut to $3.40 to $3.70 a share, down from its previous range of $3.70 to $4.10.
Hurricane activity in the U.S. and the Caribbean will also impact Southwest Airlines Co.'s (LUV) quarterly performance. The airline expects operating revenue to be reduced by $100 million after cancelling roughly 5,000 flights. Operating revenue per available seat miles is expected to come in flat to down 1%.
Weekly jobless claims rose in the past week as blips from Hurricane Irma and Harvey continued to skew the results. The number of new claims for unemployment benefits in the U.S. climbed by 12,000 to 272,000, the Labor Department said Thursday. The less volatile four-week claims average rose by 9,000 to 277,750.
Wall Street clinched solid gains on Wednesday, Sept. 27, as the tech sector rallied and big banks made moves higher after the Trump administration laid out its plans for tax reform. The framework document proposed downsizing individual tax brackets into three from seven and reducing the corporate tax rate to 20%. The proposal was just the beginning -- now congressional Republicans will need to provide the legislative details to turn it into a bill that can pass.
BlackBerry Ltd. undefined surged 13% on Thursday after reporting a surprise second-quarter profit. The tech company earned an adjusted 5 cents a share, better than expectations of a breakeven result. Revenue declined to $238 million from $334 million. Analysts had anticipated sales of $222 million. Enterprise software and services sales increased 8%, while licensing and IP revenue rocketed 250% higher. For the full year, BlackBerry anticipates sales of at least $920 million, higher than a targeted $916 million.
Rite Aid Corp. (RAD) declined 11% on Thursday after quarterly sales came up short. Revenue dropped 4.4% to $7.68 billion, below estimates of $7.84 billion. Pharmacy segment sales fell 3.4%, while same-store sales dropped 3.4%. An adjusted net loss of one cent a share met analysts' estimates.
Applied Materials Inc. (AMAT) announced a new share buyback program and positive growth for the long term. The chipmaker anticipates adjusted earnings of $5.08 a share in fiscal 2020 thanks to sustained growth in its internet-of-things and artificial intelligence developments. That implies healthy growth from analysts' expectations of $3.21 a share in the current fiscal year. Applied Materials also authorized $3 billion in share buybacks, adding to the $995 million still available for repurchases.
The Hain Celestial Group Inc. (HAIN) rose less than 1% after conceding to activist pressure and announcing changes to its board. The organic foods company will appoint six new directors, including activist investor Engaged Capital's founder, Glenn Welling. Engaged held a 9.9% stake in Hain as of June.
Roku Inc. (ROKU) rocketed 68% higher to trade at $23.50 a share on Thursday. The streaming-device company had priced its initial public offering at $14 a share, the high end of an expected range of $12 to $14. Roku trades on the Nasdaq.
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