U.S. equities drifted higher on Wednesday in another relatively quiet session. Trader were perhaps more enamored with all the political news — debate prep, claims of sexual assault, WikiLeaks emails, etc. — than what was happening in the financial markets. And I can’t really blame them with just weeks left in the most contentious presidential election in generations.
Because how can claims of illegitimate children, state corruption and sexual assault compete with a surprise oil inventory reduction or third-quarter earnings? It can’t, to be honest.
In the end, the Dow Jones Industrial Average gained 0.2%, the S&P 500 Index went up 0.2%, the Nasdaq Composite added 0.1% and the Russell 2000 ended the day 0.4% higher.
Treasury bonds were little changed, the dollar was weaker against the yen, gold gained 0.6% and crude oil rose 2.6% thanks to a large draw of stockpiles to hit a 15-month high of $51.60 a barrel. EIA inventory data showed inventories falling by 5.3 million barrels vs. the 3.8 million barrel draw reported by API yesterday and expectations for a build.
With energy prices rising, it’s no wonder Dallas Fed President Kaplan said inflation is “likely firming,” as futures market odds of at least one rate hike before the end of the year holds near 65%.
Energy stocks led the way on oil’s rise, gaining 1.4%. Consumer staples were the laggards, down 0.7%. Oil services giant Halliburton Company (NYSE:HAL) gained 4.3% on an earnings beat driven by a 7% rise in revenues thanks to a 42% quarter-over-quarter jump in international business. Yahoo! Inc. (NASDAQ:YHOO) gained 2.5% on an earnings beat despite tepid revenues. Intel Corporation (NASDAQ:INTC) fell 5.9% despite a top- and bottom-line beat on weak guidance.
After the close, both eBay Inc (NASDAQ:EBAY) and American Express Company (NYSE:AXP) reported top- and bottom-line beats. But the market had two very different reactions: AXP rose 5% in extended trading while EBAY fell nearly 8%. The difference was in the forward guidance, with EBAY casting a dour outlook while AXP was confident.
While today’s trading was largely uneventful, watch for volatility starting Thursday as the market reacts to the outcome of the final U.S. presidential debate and a policy announcement by the European Central Bank.
Long-term bonds in Europe were under some pressure on reports the ECB was considering tapering its bond buying stimulus program — something that was officially denied.
The technical outlook remains unchanged and vulnerable, with market breadth cratering as buyers find fewer and fewer issues attractive at these levels.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
