The major indices closed slightly lower Thursday ahead of today’s jobs report, as it could be a factor in the Federal Reserve’s decision whether to raise interest rates in December.
Investors’ focus was on earnings. Facebook Inc (FB) topped both profit and revenue forecasts, and the stock jumped 4.6%. Whole Foods Market, Inc. (WFM) reported its first drop in quarterly same-store sales in six years, and the stock closed off 2.1% after being down as much as 6.6%.
Walt Disney Co (DIS) reported after the close, with profits exceeding expectations but revenues falling short.
Valeant Pharmaceuticals Intl Inc (VRX) fell 14.4% as questions regarding its accounting practices and relationship with specialty pharmacies continued to plague the stock. Shares are now down more than 70% from their August high.
Another drug company, AstraZeneca plc (ADR) (AZN), rose 1.2% after it reported better-than-expected third-quarter results and raised its full-year guidance.
Weekly initial jobless claims rose by 16,000 to a seasonally adjusted 276,000 but are still historically low.
The euro was up slightly against the U.S. dollar at $1.0884, but the rebound paled in comparison to Wednesday’s decline.
In commodities trading, gold lost 0.2% at $1,104.40 an ounce. Crude oil dropped 2.4% to $45.20 a barrel.
The yield on the 10-year Treasury note rose to 2.26% from 2.25% on Wednesday.
At Thursday’s close, the Dow Jones Industrial Average fell 4 points to 17,863, the S&P 500 was off 2 points at 2,100, the Nasdaq lost 15 points at 5,128, and the Russell 2000 was up a fraction of a point to 1,191.
The NYSE Composite’s primary exchange traded 895 million shares with total volume of 4 billion. The Nasdaq crossed 2 billion shares. On both major exchanges, decliners outpaced advancers by about 1.2-to-1. On the Big Board, block trades totaled 4,972, down from 5,169 on Wednesday.
The Dow Jones Transportation Average is still struggling to poke into the resistance starting at 8,260 to the 200-day moving average at 8,448.
A shaky technical picture has evolved in the form of declining volume and a MACD sell signal. More importantly, on the fundamental side, a bottom appears to be taking shape in crude oil charts. An increase in fuel prices could kill a fragile turnaround in the transportation index.
As for the Dow Jones Industrial Average, the death cross of August has yet to be resolved. The 50-day moving average at 16,849 is still more than 700 points from the 200-day moving average at 17,583.
MACD is arching down and close to a short-term sell signal, and volume has dropped sharply from just two weeks ago.
Conclusion
Stocks have stalled at recognized technical barriers. And a major headwind continues to be the transports’ inability to advance into resistance. A break there would give the bulls something to cheer about. On the other hand, a failure would likely stall the advance.
In the previous Daily Market Outlook, I said I would discuss the application of my proprietary indicator, the Collins-Bollinger Reversal (CBR), to my explanation on Bollinger Bands. However, Texas weather is rattling the windows, so rather than chance losing it all, I’ll work on the CBR explanation over the weekend.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
