What's moving markets today: October 23, 2019
US stocks were flat to slightly higher at the close, as investors focused on this evening's earnings.
It was a quiet day for the major stock indexes. The Dow finished up 46 points, or 0.2%.
US stocks hovered near yesterday's close in the second half of the trading day, as investors continued to digest corporate earnings.
The Dow is nearly split 50:50 in terms of stocks in the green and in the red.
Investors should brace themselves for a volatile fourth quarter of the year.
"We're not looking for a recession, but we're looking for a steeper slowdown than the consensus is currently forecasting," said Greg Boutle, US head of equity and derivative strategy at BNP Paribas.
Macroeconomic data is expected to worsen in the fourth quarter, Boutle told Alison Kosik on the CNN Business' live show Markets Now.
So even though there are positive drivers for the stock markets -- including hopes for a full trade deal with China and a very accommodative Federal Reserve -- the good news could be overshadowed by economic data and corporate downgrades in coming weeks.
In fact, one reason major US stock indexes remain within arms length of all-time record highs is because so much good news is already priced in, Boutle said.
Even as trade tariffs, interest rates and the slowing global economy are weighing on stocks, US markets are still looking somewhat favorable.
"There's no question that the trade issues are weighing heavily on profits here and around the world," Teddy Weisberg, founder of Seaport Securities, told Alison Kosik on CNN Business' digital live show Markets Now. But the US economy is still in relatively good shape, which will support American companies.
This makes it hard to "run for the hills," the veteran investor added. "It's hard to pick the negative event du jour that's the most important.:
But "the markets are kind of telling us that as they're looking ahead, those clouds we all worry about are going to go away," he added.
The Dow might be America's best-known stock index, but it sure hasn't been performing the best in October.
Unlike the S&P 500, the Dow is not weighted by market capitalization," said Fawad Razaqzada, technical analyst at Forex.com. "This makes it vulnerable as any of its 30 components can have a big impact on the index, which is why — despite its popularity — it is not considered to be a good representation of the US stock market."
Today, Dow constituents Boeing (BA) and Caterpillar (CAT) reported earnings. Microsoft (MSFT) is due after the closing bell. And earnings season isn't over yet, meaning that the market could move a lot through the end of the month.
For now, "the Dow is not exactly breaking down but it isn't surging higher either. In other words, it is consolidating," said Razaqzada.
A key level to watch is 26,705 points — roughly 125 below today's level — which has been a trigger point for further weakness, the analyst said.
You can add cute little circular robot vacuum cleaners to the growing list of products that are casualties of the US trade war with China.
Shares of iRobot (IRBT), maker of the popular Roomba, plunged more than 10% Wednesday after the company warned of a weaker outlook because of higher tariffs. The stock is now down nearly 45% this year.
The company manufactures the Roomba in China and exports it to the United States. As a result, tariffs on the Roomba went up from 10% to 25% in May. iRobot CEO and co-founder Colin Angle told analysts on a conference call Wednesday that the company raised prices in late July to offset some of the costs related to the higher tariffs.
The move backfired, Angle said, because most competitors "opted to absorb the tariffs and keep prices steady." Angle said Roomba sales this summer were "suboptimal" and the company subsequently decided to roll back prices earlier this month. That should help sales but it will hurt profit margins in the fourth quarter and 2020.
iRobot has asked the federal government for an exemption from the tariffs. But the damage is already done. That's why Angle said the company is also shifting some production to Malaysia. He called that "the most favorable outcome" since the company is "not holding our breath and waiting for tariffs to be exempted."
US stocks kicked the day off mixed.
On a day with a relatively empty economic calendar, corporate earnings are the main driver for the market.
Caterpillar (CAT) and Boeing (BA), both heavily-weighted Dow components, reported before the bell. Although both companies posted disappointing outlooks, their stocks rose, because investors were relieved the news wasn't worse.
Boeing (BA) is profitable again. But the 737 Max crisis is still a major problem for the company's financial results.
The aircraft maker earned $895 million in the third quarter, bouncing back from a $3.7 billion loss in the previous quarter. That loss was because of a $5 billion charge related to the grounding of the 737 Max in March.
Boeing's most important plane was grounded after two fatal crashes that killed 346 people.
The stock is up 1% in premarket trading.
Amid the earnings bonanza, US stocks are poised to start the day slightly lower, adding on from Tuesday's losses.
But with this many earnings releases today, the indexes could easily be dragged down further. On Monday and last week Friday, falling shares of troubled Boeing (BA) dragged down the Dow. Boeing reported today and could slide again in today's trading. The stock is up 0.9% in premarket trading so far.