U.S. equities moved higher yet again on Tuesday, showing a steadfast resistance to anything resembling selling pressure since the middle of August. The mid-day action was nearly a carbon copy of Monday: An accelerating ramp at the open that moderated into the closing bell. No major catalysts were in play, although there was some focus on solid auto sales numbers.
In the end, the Dow Jones Industrial Average gained 0.4%, the S&P 500 gained 0.2%, the Nasdaq Composite gained 0.2% and the Russell 2000 gained 0.2%. Treasury bonds were stronger, the dollar was mixed, gold was little changed and crude oil fell 0.3%.
Breadth was positive with advancers outpacing decliners by a 1.3 to 1 ratio while volume was relatively light, at 83.8% of the NYSE’s 30-day average. Defensive telecom led the way with a 1.1% gain while utilities were the laggards, down 0.4%.
Click to Enlarge Delta Air Lines, Inc. (NYSE:DAL) gained 6.6% after reporting better-than-feared forward guidance. Homebuilder Lennar Corporation (NYSE:LEN) gained 4.8% on a quarterly earnings beat on stronger margins with management noting hurricane damage likely to boost demand into 2018.
CenturyLink Inc (NYSE:CTL) gained 4.5% after the Department of Justice gave conditional antitrust clearance for its proposed takeover of Level 3 Communications, Inc. (NYSE:LVLT). And General Motors Company (NYSE:GM) gained 3.1% on better-than-expected September sales and an upgrade from analysts at Bank of America Merrill Lynch.
On the downside, Urban Outfitters, Inc. (NASDAQ:URBN) fell 3.7% on a downgrade from Deutsche Bank.
On the economic front, WardsAuto estimates September auto sales could come in near an 18.5 million seasonally-adjusted annualized rate — hitting the highest pace for the year.
That would be well above the 17.4 million expected and the 16.1 million rate seen in August. The tally was boosted by post-hurricane demand and high manufacturer incentives, which totaled over $4,000 per vehicle according to JD Power.
Click to Enlarge The focus remains on the near vertical rise in small-cap stocks, which actually spent the bulk of the day trading in negative territory before rallying into the closing bell — ensuring all the major averages notched a new record high.
There’s really not much to add: Sentiment remains white-hot, valuations are extended, seasonal headwinds don’t seem to matter, and investors seem determined to remain convinced tax reform is a slam dunk deal.
One thing that could upturn the apple cart: The Federal Reserve will start reducing its balance sheet this month, reversing years of quantitative easing that started in early 2009.
Check out Serge Berger’s Trade of the Day for Oct. 4.
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.
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