Despite a mixed bag of data from the earnings and economic fronts, and the Federal Reserve’s monetary policy decision on the horizon, U.S. equities notched further gains today. The S&P 500 continued to set records and registered its fourth consecutive advance to extend its October gain to 5.4%. Treasuries finished unchanged following the deluge of data, gold and crude oil prices were lower, while the U.S. dollar was higher.
The tech-heavy Nasdaq posted a modest advance of 0.3% after the exchange experienced an intraday data dissemination issue that prevented index quotes from being sent out for nearly an hour. However, the issue was isolated to the index while individual components traded normally.
One of the components that contributed to the Nasdaq’s underperformance was Apple. The largest tech stock lost 2.5% after its below-consensus gross margin guidance overshadowed its earnings beat on above-consensus revenue. Despite Apple’s relative weakness, the technology sector (+0.5%) ended in-line with the broader market, bolstered in part by the 2.7% gain in the shares of IBM after the company’s Board of Directors authorized an additional $15 billion for its share buyback program.
Outside of technology, consumer discretionary (+0.6%) and energy (+0.7%) were the only other outperformers among cyclical sectors while financials, industrials, and materials ended with gains of 0.3% apiece. The discretionary sector received support from homebuilders as all major builders posted gains while the iShares Dow Jones US Home Construction ETF rose 1.4%.
Meanwhile, the energy sector was underpinned by BP and Valero after both reported solid quarterly results. Among countercyclical groups, utilities (+0.1%) lagged while consumer staples (+0.9%), health care (+0.7%), and telecom services (+1.5%) outperformed.
On the economic front, producer prices unexpectedly declined at the headline level, retail sales were mixed, and home prices increased again, while consumer confidence declined to its lowest level in one-and-a-half years and business inventories rose inline with forecasts. The data added to evidence of sluggish economic growth just as the Fed began a two-day policy meeting. Expectations are high that officials are unlikely to shift monetary policy this week as they wait for more evidence of how badly Washington’s budget battle has hurt the U.S. economy.
Overseas, the People’s Bank of China injected liquidity into the money markets for the first time in two weeks, per Bloomberg, though concerns about a credit crunch continued to fester.
Elsewhere, India’s rupee strengthened in the wake of the Reserve Bank of India raising its benchmark interest rates for the second-straight month, as expected, with the nation battling rising inflation.
Our Trend Tracking Indexes (TTIs) headed higher with the Domestic TTI closing at +5.26% while the International TTI ended the day at +8.54%.