Google, Jobs Growth "Scare Away" Market Ghosts
Google cracks $700, GDP blows away all estimates, and jobs growth might not be that bad after all. The stock market this Halloween is clearly forgetting what's been spooking it. All these headlines add up to a pretty robust day for the market, but how stocks end the day (and the month) will all depend on the Fed's decision and comments.
The Federal Open Market Committee will wrap up its second day of meetings and issue a statement on rates at 2:15 p.m. It is widely expected to cut its Fed funds target rate by a quarter point to 4.50%.
Third quarter gross domestic product, the value of all goods bought and sold, grew at 3.9% vs. an expected 3%. The break down of that number shows the weak U.S. dollar gave a big boost to exports, up 16.2%. The question is whether this is sustainable, and based on their forecasts, it's safe to say most economists think not.
The U.S. dollar rose and Treasuries sold off, starting with the release this morning of ADP's employment report which showed the private sector added 106,000 jobs in October, way more than the 61,000 expected. The report is a kind of preview of the employment numbers for October which are reported this coming Friday.
As Wall Street gets ready to slam the books on October, we'll take a look at some stock market standouts. First, Google. Less than a month after crossing $600, it blasted through $700 and is ready to run. "Street Signs" producer Ellen Egeth points out this gain is nothing! Google is up just 52%, less than half of the 121% move in Apple year to date. "Who's the real tech superstar?" she asks.
Who were the superstars in the market this month? CNBC's Matt Nesto reports on that today. Looking at some of those sector moves and you'll see that tech edges out utilities as the best performer in October. The S&P tech sector is up 5.3% and utilities are up 5.1%. Investors made a strong offensive into tech, but there is a lot of cash hiding out in in defensive, dividend-rich utility stocks.
No surprise financials were the worst performers for the month, down 2.8%. Despite oil's big run for October, energy stocks were down 0.8%. The Dow, by the way, is up 0.7% for the month as of Tuesday's close, and is up 11% year to date. The Nasdaq is up 4.3% for the month, and the S&P 500 is up 0.3% for the month. Traders say they are watching the S&P closely today as it nears a technical level of 1540.
Earnings Trend Kraft this morning said its profits dropped 20% to $596 million and it blames record high dairy prices. Clorox reported profits of $111 million and announced it was buying Burt's Bees for $925 million. Like other producers, Clorox said it was pressured by higher costs, including resin and commodities, like corn starch and soybean oil. This will pressure its gross margins next year.
Oil prices at the NYMEX jumped after inventory data showed a steep drop in supply. Crude quickly regained much of Tuesday's 3.4% decline of $3.15 per barrel. It is trading just below $93 per barrel this morning.
U.S. on Top
The World Economic Forum says the U.S. is the most competitive economy in the world. Switzerland came in second, then Denmark, Sweden, Germany, Finland and Singapore. Criteria includes market efficiency, sophistication of business community, technological innovation, and education.
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