Stocks staged a big rally Thursday as the major indexes each rose more than 1%. Trading volumes on the Nasdaq and New York Stock Exchange were heavier than usual, with NYSE advancing issues leading declining issues by a ratio of 3.8 to 1 in the final hour of trading.
First, the scoreboard:
- Dow: 17,129.75, +205.00, (1.21%)
- S&P 500: 2,022.34, +28.10, (1.41%)
- Nasdaq: 4,861.61, +78.76, (1.65%)
And now, the top stories on Thursday:
- US inflation fell in September, but not really. The consumer price index (CPI) fell 0.2% compared to August, below expectations, and was flat year-on-year, according to the Bureau of Labour Statistics. But excluding volatile food and energy costs, core CPI rose 0.2% month-on-month, and 1.9% year-on-year. The energy and gasoline indexes declined sharply, while indexes for food, and all items excluding food and energy rose.
- The inflation data also came with bad news for Social Security recipients. The 2015 cost-of-living adjustment was left unchanged, as low gas prices kept inflation at bay. That means the 70 million people on the program will not see an increase in benefits next year. In fact, retirees may see their Medicare Part B premiums increase by as much as 52%.
- Manufacturing continues to be in recession, as evidenced by the two latest regional reports. The Empire State manufacturing index from the New York Federal Reserve for October was -11.36, up from -14.67, but still indicating contraction. And, the Philly Fed’s index was -4.5 for the month, also an improvement from September, but still indicating a deceleration in activity. “In short, a grim [Philly Fed] report, but it can be argued that the weakness in the sub-indexes represents something of a catch-up after overshooting relative to national ISM manufacturing index,” wrote Pantheon Macroeconomics’ Ian Shepherdson in a client note.
- The monthly average of initial jobless claims fell to 265,000, the lowest level since December 1973. Last week, unemployment insurance claims totaled 255,000, down from 263,000 in the prior period, and better than expected.
- Goldman Sachs reported quarterly earnings that missed on the top and bottom lines. The bank reported adjusted earnings per share of $US2.64 ($US3.00 expected) on revenues of $US6.86 billion ($US7.12 billion estimated). “We experienced lower levels of activity and declining asset prices during the quarter, reflecting renewed concerns about global economic growth,” CEO Lloyd Blankfein said in the statement.
- Citigroup beat on its profits, with EPS of $US1.31 topping the consensus estimate for $US1.28. Revenues of $US18.5 billion fell just short of expectations for $US18.6 billion. The firm’s net income rose 51% year-on-year to $US4.3 billion, driven by lower operating expenses and a lower effective tax rate. Investment banking revenues fell 25% year-on-year to $US937 million and fell short of estimates.
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