Stocks were mixed on Wednesday, Oct. 4, with Wall Street taking a pause after days of records.
The Dow Jones Industrial Average managed to hit a new intraday record with minuscule gains early Wednesday. The blue-chip index rose just 0.06% and secured a new all-time high of 22,662.4.
The S&P 500 declined 0.03%, and the Nasdaq dipped 0.07%. Benchmark indexes ended the previous day at new records -- the Dow for its second day in a row, the Nasdaq its third, and the S&P 500 its fourth.
A busy end to the week is likely to keep investors cautious. The official U.S. jobs report will be released on Friday, Oct. 6, in what is commonly the most important data set of the month. Economists surveyed by FactSet anticipate 75,000 jobs to have been added to the U.S. economy in September, a sharp slowdown from the 156,000 jobs added in August. The measure has not fallen below the 100,000 mark since March and has only been below that threshold four times in the past five years.
The ADP employment report, a preview to the nonfarm payrolls report, showed 135,000 jobs added to the private sector in September. This marked a sharp slowdown from the 237,000 jobs added in August. Analysts expected a slightly higher rate of 140,000 jobs. The slowdown can be partially attributed to a series of hurricanes that swept across the U.S. in early September.
Weekly jobless claims have already shown the initial impact of hurricanes Harvey, Irma and Maria with the number of new applications for unemployment benefits seeing an uptick in recent weeks.
Services activity rose at a faster pace than anticipated in September. The ISM non-manufacturing index increased to 59.8 in September, up from 55.3 in August. Analysts expected a reading of 55.5. The measure hit its highest level in September since August 2005. The business activity component reached 61.3, its 98th straight month of growth.
A separate reading on the sector showed services activity in the U.S. slow incrementally in September, though hold in expansion territory. The PMI Services Index dipped to 55.3 in September from 56 in August, according to Markit Economics. Economists expected a reading of 55.2. The third quarter marked the fastest average three-month growth period of the year.
Crude oil inventories saw a far steeper decline in the past week as operational refineries continued to work through the buildup in stocks caused by Hurricane Harvey. A number of refineries in the region were shuttered in the immediate aftermath in early September, causing crude stockpiles to spike.
Crude inventories fell by six million barrels in the past week, according to the Energy Information Administration, far steeper than an expected decrease of 800,000 barrels. Gasoline stockpiles increased by 1.6 million barrels, while distillates fell by 2.6 million.
West Texas Intermediate crude was up 0.4% to $50.61 a barrel on Wednesday morning.
Investors will also get another chance to elucidate Federal Reserve Chair Janet Yellen's thinking on the future path of rate hikes on Wednesday. Yellen is set to deliver the opening remarks at the Community Banking in the 21st Century Conference in St. Louis, late Wednesday afternoon.
Last time Yellen spoke on the economy, investors left puzzled. In comments in the past week, Yellen took a far more dovish tone but kept the possibility of an interest rate hike in December alive. Previous comments from the Fed following its September meeting made the possibility of a December rate hike far more certain. Investors are confident the Fed will move by the end of the year -- a December hike has a 76% chance, according to CME Group fed funds futures.
PepsiCo Inc. (PEP) - Get Report declined 2% following a mixed third quarter. Earnings of $1.48 a share came in a nickel ahead of consensus. Revenue climbed 1.3% to $16.24 billion, but missed estimates by $70 million. Organic revenue increased 1.3%. By segment, Frito-Lay America revenue increased 3%, Quaker Foods North America 1%, and Latin America 6%. North America beverages dropped 3%.
Monsanto Co. (MON) rose on Wednesday after topping quarterly estimates on its top- and bottom-line. The agricultural chemicals company reported surprise adjusted profit of 20 cents a share, far better than an expected per-share loss of 41 cents. Revenue increased 5.1% to $2.69 billion, beating consensus by $160 million. Its merger with Bayer is scheduled to be completed early next year.
Acuity Brands (AYI) - Get Report tumbled 4% after missing fiscal fourth-quarter sales estimates. Adjusted net income of $2.55 a share beat estimates of $2.41. Revenue of $957.6 million came in below expectations of $974.6 million. Volume increased 4.5%, while sales grew 3.5%.
On Capitol Hill, former Equifax Inc. (EFX) - Get Report Chairman and CEO Richard Smith heads out for day two of congressional testimony on the data breach that exposed the personal data of nearly half the U.S. population. A day earlier, Smith said he takes "full responsibility." He said the failure to implement a software patch in March and an unsuccessful digital search for vulnerabilities were to blame.
Separately, the Internal Revenue Service awarded the credit-rating agency a $7.25 million contract to prevent fraud. A contract award for Equifax's data services to verify taxpayer identity and assist in identification verification and validations was posted on the Federal Business Opportunities database on Saturday, Sept. 30. The order was issued to prevent a lapse in identity checks while officials resolve a dispute over another contract. LexisNexis Risk Solutions and TransUnion are listed as interested vendors.
FuelCell Energy Inc. (FCEL) - Get Report was sharply higher on Wednesday after Oppenheimer analysts initiated coverage with an outperform rating and set a $4 price target. The firm said FuelCell was a "clear leader" in the industry. Analysts also forecast positive operational cash flow in at least 12 months.
Mylan NV (MYL) - Get Report rocketed 18% higher after the Food and Drug Administration granted approval to its generic version of Copaxone, a Teva Pharmaceuticals (TEVA) - Get Report drug that treats multiple sclerosis. BTIG Research raised its price target on Mylan to $45 from $42 on the news.
Office Depot Inc. (ODP) - Get Report tanked 17%, hitting an 11-month low, after agreeing to purchase IT business services company Compucom for roughly $1 billion. Office Depot said this was a move to transform into a "broader business services and technology products platform." The retailer also issued preliminary third-quarter figures. Sales are expected to decline by 7% to 8%, while comparable sales are forecast to drop by 5% to 6%.
Updated from 10:11 a.m. ET, Oct. 4.
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