Stocks climbed into Thursday's open as Netflix stock soared on earnings and a Brexit draft agreement stirred optimism across global markets. The Nasdaq popped 0.7% and the S&P 500 traded up 0.6%. The Dow Jones today approached its record high, up 0.4% as heavy early losses from IBM (IBM) dragged on the index.
XNetflix (NFLX) was the early headline advancer, opening with a 6% spike after scoring a strong third-quarter earnings win late Wednesday. United Rentals (URI) soared more than 6%, approaching a buy point after its third-quarter results blew past analyst estimates. Industrial components maker Dover (DOV) broke out after its Q3 results spurred a 7% gain.
JPMorgan (JPM) and Johnson & Johnson (JNJ) set the pace on the Dow, up well over 1% each. Johnson & Johnson rode expectations for a settlement from opiod makers ahead of a class-action trial set to begin on Monday.
IBM tumbled 6%, after its late-Wednesday earnings report showed third-quarter revenue faded more than expected.
Marijuana stocks rallied, boosted by a sudden spike in Cronos Group (CRON) shares. Cronos stock catapulted more than 40% in Wednesday's after-hours session, and traded up 16% at Thursday's open. Aurora Cannabis (ACB) bolted 4% higher. Tilray (TLRY) rose 2%.
Alcoa (AA) spiked 10%, railroad CSX (CSX) added 4.2% after reporting late Wednesday. Morgan Stanley (MS) scrambled ahead nearly 4% after reporting a strong earnings beat early Thursday. Aerospace leader Textron (TXT) dived 4% on mixed third-quarter results. Railroad Union Pacific (UNP) shook off early losses and climbed into narrow gains after both revenue and earnings missed targets.
Chip stocks were mixed as foundry Taiwan Semiconductor (TSM) edged lower after beating third-quarter estimates and raising its guidance. Applied Materials (AMAT) jumped 2%. Cirrus Logic (CRUS) jumped 2% after an upgrade to equal weight from Barclays.
(For updates on this story and other market coverage, visit the Stock Market Today.)
Housing Starts, Philly Fed Survey Slip
Housing starts slowed in September to an annualized rate of 1.256 million, the Commerce Department reported. That was down from August's pace of 1.364 million starts, and below economist views for a downtick to 1.3 million. Building permits, which gauge upcoming homebuilding activity, slowed to a rate of 1.387 million, vs. 1.419 million in August. That was above projections for new permits issued at a rate of 1.335 million for the month.
The National Association of Homebuilders reported Wednesday its October builders confidence index outpaced expectations, rising to a reading of 71 for the month — its highest level in almost two years. Economists projected a no-change reading of 68.
Applications for first-time unemployment claims ticked higher, to 214,000, in the week ended Oct. 12, according to the Labor Department.
October manufacturing activity in the mid-Atlantic region was so-far mixed, sending the Philadelphia Federal Reserve Bank's Manufacturing Business Outlook Survey to a reading of 5.6 for the month. That was less than half of September's tally of 12, undercutting expectations for a slowdown to 7.1. General activity and shipments decreased, but new orders and employment gained for the month, the report said.
U.K.-E.U. Agree On Brexit Draft
The U.S. market remains predominately concerned with the unfolding earnings season, as well as matters of U.S.-China trade. But negotiators in Brussels Thursday agreed upon a hard-fought draft of trade policy rules for the U.K.'s economic exit from the European Union. Leaders of the 27 EU countries are expected to approve the draft in a Thursday afternoon meeting. It will be the first Brexit proposal proffered by new Prime Minister Boris Johnson for a vote in Britain's Parliament, which rejected the prior three efforts presented by Johnson's predecessor, Theresa May.
If a deal is not approved by both the U.K. and E.U. before the Oct. 31 deadline, Johnson would be forced to request an extension — a move that could further weaken his term, which is less than three months old.
Netflix Stock Rockets On Results
Netflix third-quarter earnings jumped 65%, while revenue jumped 31%. Both were the biggest moves in four quarters. The company added 6.77 million new streaming subscribers during the quarter — roughly the combined populations within the Chicago and Los Angeles city limits — but fell short of expectations for 7 million new viewers. The vast majority of those new viewers were from outside the U.S.
The report catapulted Netflix stock more than 8% higher. Shares ended Wednesday up more than 13% from a September low, and butted up against resistance at their 50-day line.
Is Netflix Stock A Buy Right Now? Here's What NFLX Earnings, Charts Show
Dow Jones Today — A Battle At 27,000
The Dow Jones today continues its battle at the 27,000 line, hanging tough between its 50-day line of support and the 27,398 high chalked up in July. The Dow's 50-day moving average is sitting almost exactly at the the index's 26,616 high, marked at the launch of the U.S.-China trade war in January 2018.
The Nasdaq is easily leading the market in October, up 1.6% for the month through Wednesday. The Dow has a 0.3% gain and the S&P 500 is up 0.5% since the start of the month.
The Nasdaq racked up another distribution day on Wednesday, putting it and the S&P 500 at seven days each. Seven is a high number — particularly when it accrues on more than one index. A rise in distribution days over a short period of time raises the possibility that the market could be due for a pullback.
For now, the stock market remains in a confirmed uptrend status.
For more detailed analysis of the current stock market and its status, study the Big Picture.
Europe Rallies On Brexit News, India Surges
Stocks in Europe upshifted on news of the Brexit draft. Frankfurt's DAX gained 0.4% and London's FTSE 100 rallied 0.9% in afternoon trade. The CAC-40 in Paris backed off its early gains and traded up 0.1%.
In China, Hong Kong's Hang Seng Index gained 0.7%, while the Shanghai Composite closed all but flat, down less than 0.1%. In Japan, Tokyo's Nikkei 225 also ended with a fractional decline, while India's BSE Sensex jumped 1.2%. India-based issues trading on U.S. markets were generally positive ahead of Thursday's open. Tata Motors (TTM) was an early leader, up more than 9% in premarket trade.
Investors were exiting safe havens following Europe's Brexit news, with bonds falling, lifting the 10-year yield 4 basis points to 1.78%. Gains in the euro outpaced the dollar, and the dollar rose vs. the yen. Gold was off 0.3% at $1,490 an ounce. In oil prices, West Texas Intermediate traded 0.5% lower, hovering in the $53 to $54 a barrel range. Europe's Brent crude benchmark dipped 0.2%, holding above $59.
Find Alan R. Elliott on Twitter @IBD_AElliott
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