There were more records all around for Wall Street on Wednesday, Oct. 4, as just small gains carried the market to all-time highs.
The Dow Jones Industrial Average was up 0.09%, the S&P 500 increased 0.12%, and the Nasdaq gained 0.04%. All three reached intraday records earlier in the session. Wednesday marked the third straight record close in a row for the Dow, the Nasdaq's fourth, and the S&P 500's fifth.
However, a busy end to the week kept 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.
Federal Reserve Chair Janet Yellen did not provide any more clues as to the future pace of rate hikes at a conference on Wednesday afternoon, instead opting to focus on banking regulation. In comments at the Community Banking in the 21st Century Conference in St. Louis, Yellen said the Fed was working to ease regulatory pressure on smaller banks.
"The Fed has been working hard to ensure that its regulation and supervision of banks are tailored appropriately to the size, complexity and role different institutions play in the financial system," Yellen said in her opening remarks.
The 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.
Apple Inc. (AAPL) prevented the Dow from stronger momentum on Wednesday. The world's largest company fell less than 1% on reports of issues with the rollout of its latest devices. There have been instances of the new iPhone 8 Plus bursting open, likely the result of a swelling battery, according to media reports. An Apple spokesperson told MacRumors that the company was looking into the issue. A separate report suggested that Apple may delay shipments of its high-end iPhone X model until December.
In economic news, services activity in the U.S. 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 down 0.9% to $49.98 a barrel on Wednesday.
In earnings, PepsiCo Inc. (PEP) reported 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 slightly 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.
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) was 17% 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) was the best performer on the S&P 500 after the Food and Drug Administration granted approval to its generic version of Copaxone, a Teva Pharmaceuticals (TEVA) drug that treats multiple sclerosis. BTIG Research raised its price target on Mylan to $45 from $42 on the news.
Office Depot Inc. (ODP) tanked 17% 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%.
Tesla Inc. (TSLA) jumped nearly 2% on Wednesday after Nomura analysts initiated coverage with a buy rating and $500 price target. The firm believes Tesla can work through production hurdles, pointing to backlogged orders and a "loyal, economically irrational customer base."
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