We’re just two days into the month and October continues to deal the blows to stocks. At one point Wednesday, the S&P 500 was down more than 2%. So to say it was a tough session in the stock market today is putting it lightly.
Ultimately, the SPDR S&P 500 ETF (NYSEARCA:SPY) fell 1.7%, the SPDR Dow Jones Industrial Average (NYSEARCA:DIA) dropped 1.8% and the PowerShares QQQ ETF (NASDAQ:QQQ) sank 1.7%.
What’s going through investors’ heads?
Well, it’s obviously not positive or optimistic thoughts. While we got a disappointing PMI result on Tuesday, investors need to remember that the strikes at General Motors (NYSE:GM) and the grounding of Boeing’s (NYSE:BA) 737 MAX aren’t helping. While we can’t brush off the PMI report on that alone, it’s worth noting.
The ADP report on Wednesday also offered two sides to the coin. While the jobs results were better than expected, it also showed a slowing rate in hiring.
U.S. investors have a dovish Federal Reserve, but that doesn’t seem to be making much of a difference right now. Keep in mind, on Friday we’ll get the non-farm payrolls report for September. Further, earnings season will begin in earnest on the week of Oct. 15. That will likely be a driving force for what the market does going into year-end.
Movers in the Stock Market Today
Johnson & Johnson (NYSE:JNJ) was one of the few positive names in the stock market today. The company agreed to an opioid-related settlement, paying $20.4 million to two Ohio counties. It removed J&J from the federal trial that was set to start later this month.
Mallinckrodt (NYSE:MNK) settled with the counties on Tuesday, while remaining defendants in the same trial include Cardinal Health (NYSE:CAH), Teva (NYSE:TEVA), Walgreens (NASDAQ:WBA) and Henry Schein (NASDAQ:HSIC).
Shares of General Motors tumbled 4.5% at one point to its lowest level since June. A double-whammy hit the stock, first with the UAW rejecting General Motors’ latest proposal. Further, the company announced third-quarter sales rose 6.3%, below estimates of 7.1%.
While investors await the quarterly sales results from Tesla (NASDAQ:TSLA), reports say the company is buying DeepScale, a computer-vision startup. While the terms were not disclosed, it’s clear the company would make this move to further its autonomous driving efforts.
More importantly — at least in the short-term — Reuters reported that Tesla is set to begin production in Shanghai later this month. Tesla’s doubters have been extra critical of its plans to produce vehicles in China this year, although it’s not clear if the company will hit its target to produce 1,000 Model 3s per week by year end.
Shares of Exxon Mobil (NYSE:XOM) slipped several percent after the company warned about its upcoming quarterly results. Exxon says third-quarter profits will fall about 50% year-over-year to $3.1 billion thanks to lower oil prices.
Exxon and GM were two of the stocks featured in Wednesday’s Top Stock Trades column.
Earnings Movers
Shares of Stitch Fix (NASDAQ:SFIX) dropped over 10% on Wednesday. However, the stock posted a pretty impressive bounce from the lows, given that it opened at $17. The move comes after earnings of 7 cents per share beat estimates by 3 cents and as revenue was in-line with expectations. However, management’s Q1 revenue outlook came up short of expectations.
SFIX is now below key support, as outlined in the pre-earnings plan.
Lennar (NYSE:LEN) stock hit new 52-week highs on Wednesday after the company reported better-than-expected earnings. Shares opened higher and hit a new annual high, before temporarily turning red and then bouncing again. Earnings of $1.59 per share crushed estimates by 27 cents, while revenue of $5.9 billion handily topped estimates by $380 million.
Lennar has also been showing solid relative strength this month.
Paychex (NASDAQ:PAYX) eked out a gain Wednesday, rallying almost 2% after the company beat on top- and bottom-line expectations for the first quarter. However, full-year guidance for both sales and earnings came in ahead of expectations, helping give some “oomph” to the share price despite a tough session in the stock market today.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
