Yes, Halloween was yesterday, but endure one more related pun: The October jobs report that was released earlier today didn’t trick investors. Rather, it a provided a treat that boosted stocks to end the week and start November on the right foot.
The major equity benchmarks rallied today after the Labor Department said U.S. employers added 128,000 new jobs last month, well ahead of the 85,000 economists were expecting. That against the backdrop of massive layoffs in the automotive industry and the loss of about 20,000 temporary 2020 census workers. Additionally, the September number was revised higher to reflect the addition of 180,000 jobs.
While unemployment inched up to 3.6%, it’s still low by historical standards and average hourly earnings rose 3% in October. Remember, today’s jobs report comes just a couple of days after the Federal Reserve lowered interest rates for the third time this year. Following the most recent FOMC meeting, the central bank noted it’s rate-cutting regime may be on hold for awhile and the data seem to support that stance.
Another rate cut may not be coming anytime soon, but markets didn’t care about that today as the Nasdaq Composite jumped 1.13% while the S&P 500 rallied by 0.97%. The Dow Jones Industrial Average advanced by 1.11% with 19 of its 30 components pointed higher in late trading.
Surprises In the Winners Column
Two of the Dow’s four healthcare components eked out gains today and pharmacy operator Walgreen Boots Alliance (NASDAQ:WBA), a consumer staples stock with significant healthcare exposure, surged nearly 5%.
However, the real story among Dow healthcare names and it’s related to WBA’s rally, is the gain, albeit modest, for UnitedHealth (NYSE:UNH). Indulge my speculation for a moment because I suspect UnitedHealth and rival managed care stocks were in the green today because Democratic frontrunner Sen. Elizabeth Warren (D-MA) finally detailed costs for her proposed Medicare For All plan.
“Investors have deemed the Sanders plan to be untenable, at least as laid out in its initial form,” said Jeffries analyst Jared Holz, reports Barron’s. “We think the Warren proposal, along with its $52 trillion price tag, will also be met with skepticism to say the least and likely viewed as a non-starter by many. Early feedback suggests this is the case. “
Putting $52 trillion into context, that’s roughly 52 Apple Inc’s (NASDAQ:AAPL).
Speaking of Apple
It was just another day at the office for the iPhone maker as the shares jumped 2.50%, starting November on healthy note after posting a double-digit gain last month.
One of the more relevant Apple news items out today was the company asking the Trump administration to relax China-related tariffs on some important products, such as the iPhone 11 and Apple Watches.
“The company on Thursday sought tariff exclusions from 11 products, including HomePod speakers, iMac computers, parts for use in repairing iPhones, iPhone smart battery cases, AirPods and others,” reports Reuters.
Oil Earnings
Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), the two largest domestic oil companies and both Dow components, reported third-quarter earnings today. Exxon gained 2.77% to rank as one of the best-performing names in the Dow today while Chevron traded slightly lower.
While down by a wide margin on a year-over-year basis, Exxon’s third-quarter profit of $3.17 billion, or 75 cents per share, beat the 67 cents a share Wall Street was expecting.
Chevron’s third-quarter profit fell 36% to $2.58 billion, or $1.36 per share. On an adjusted basis, the company earned $1.55 a share, topping the consensus estimate of $1.45.
Bottom Line in the Dow Jones Today
There are few big-name earnings reports out next week, including Walt Disney (NYSE:DIS) among Dow components, but overall just 3% of the S&P 500 reports next week. So I’ll take this opportunity for a brief review of how this earnings season has progressed.
“To date, 71% of the companies in the S&P 500 have reported actual results for Q3 2019. In terms of earnings, the percentage of companies reporting actual EPS above estimates (76%) is above the 5-year average,” according to FactSet research. “In aggregate, companies are reporting earnings that are 3.8% above the estimates, which is below the 5-year average. In terms of sales, the percentage of companies (61%) reporting actual sales above estimates is above the 5-year average. In aggregate, companies are reporting sales that are 0.9% above estimates, which is also above the 5-year average.”
As of this writing, Todd Shriber did not hold a position in any of the aforementioned securities.
