Traders-Blog.com

Stocks ended mixed after a tepid sales forecast from Wal-Mart Stores Inc. added to concerns about slowing economic growth. However, some investors took comfort from a sharp drop in the price of oil and a buoyant tech sector to boost the Nasdaq.

Today, the Dow Jones industrial average closed down 3.76 or 0.03% to 12,086.50, the broader S&P 500 index closed up 0.59 or 0.04% to 1,377.93, and the tech-fueled Nasdaq closed up 13.15 or 0.56% to 2,363.77, after touching a 5-1/2 year high last week.

Market breadth was positive. On the New York Stock Exchange, winners beat losers 9 to 7 on volume of 1.43 billion shares. On the Nasdaq, advancers edged decliners 4 to 3 on volume of 1.76 billion shares.

There is plenty to suggest the advance can keep going. We have got strong earnings, stable and lower energy prices, a friendly Fed, a lot of people who missed the third-quarter move up and who are now going to have to try to make up for it in the fourth quarter.

In economic news, September personal income rose 0.5%, which is more than what Wall Street economists were expecting. Personal spending rose a smaller-than-expected 0.1% in the month. The core-PCE deflator, was up 0.2% as expected. Dampner was the comments from Federal Reserve Bank of Richmond President Jeffrey Lacker, who said that on a long-term basis, core inflation was unacceptably high. He also said the economy could withstand a few more rate hikes. However, investors are learning to disregard the comments of this lone dissenter.

Shares of Yahoo closed up $0.61 or 2.4% to $25.95, after Merrill Lynch upgraded it to “buy” from “neutral,” saying that it’s at a good entry point for investors ahead of a seasonally strong holiday period.

Stock of Wal-Mart closed down $1.20 or 2.4% to $49.53, on reporting October sales increased 0.5% against the expected 1%. This is its weakest result in nearly six years in October as its bid to provide cheap, chic apparel to women faltered and a store remodeling program inconvenienced shoppers. Analysts expect the decline to trigger aggressive price-cutting beginning this week that could pressure profit margins.

Stock of Verizon Communications closed down $1.19 or 3% to $37.65, despite reporting quarterly earnings and revenue that topped forecasts. Analyst were no happy with the projected growth in non-traditional businesses, such as broadband. The company reported a third-quarter profit of $1.92 billion, compared with $1.87 billion last year. Revenue rose 26% to $23.25 billion from $18.49 billion. This is against the expected revenue of $23.03 billion.

Shares of American Power jumped over 26% as it accepted a $6.1 billion buyout offer from French electric gear-maker Schneider Electric.

U.S. light crude oil for December delivery fell $2.39 to $58.36 a barrel on the New York Mercantile Exchange. This fall came as concerns about a possible attack on oil facilities in the Persian Gulf eased, and concerns about a softening world economy and lower energy demand resurfaced.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter
30-day risk-free trial