News on the stock market for November 3, 2016

The closing numbers for benchmarks on Wednesday revealed a negative trend, largely influenced by the Federal Reserve’s hints at a potential interest rate hike in December, even though rates remained unchanged following its two-day policy meeting. The ongoing uncertainty surrounding the U.S. Presidential election also cast a shadow on investor sentiment. All three major indexes concluded in the red, with the S&P 500 marking its seventh consecutive session of losses, a first in five years. The S&P 500 and Dow Jones both dipped below key psychological levels, specifically 2,100 and 18,000, respectively, for the first time in four months. The Nasdaq also saw its lowest closing level since July. To gain further insight into the current market challenges, be sure to read today’s Ahead of Wall Street article. The Dow Jones Industrial Average (DJI) witnessed a 0.4% decline, closing at 17,959.64. The S&P 500 recorded a 0.7% decrease, settling at 2,097.94. Meanwhile, the tech-heavy Nasdaq Composite Index closed at 5,105.57, indicating a 0.9% loss. The CBOE Volatility Index (VIX), known as the fear gauge, experienced a 4.1% surge, reaching a closing value of 19.32. Approximately 8 billion shares were traded on Wednesday, surpassing the 20-session average of 6.5 billion shares. Declining stocks significantly outnumbered advancing ones on the NYSE, with 74% of stocks declining and only 23% advancing.

Factors Weighing on the Benchmarks:

The Federal Reserve chose to maintain unchanged interest rates at its two-day policy meeting. Additionally, the Federal Open Market Committee (FOMC) reported that “the labor market has continued to strengthen,” economic growth had improved over recent months, and inflation had shown signs of upward movement. While the FOMC recognized that the case for a rate hike in December had strengthened, it expressed the need for “some further evidence of continued progress toward its objectives.” Sectors expected to be affected by higher interest rates exhibited weakness, with the Real Estate Select Sector SPDR (XLRE) suffering a 1.6% decline, making it the worst-performing sector within the S&P 500. Simon Property Group Inc. (SPG) and American Tower Corporation (AMT), both significant components of this sector, saw their shares drop by 2%. In addition to the Fed’s stance, uncertainty persisted in the market due to news of the FBI investigating Hillary Clinton’s personal emails. Recent poll results have indicated a tightening of the presidential race between Hillary Clinton and Donald Trump, with Trump leading Clinton by a slight margin according to the ABC News/Washington Post poll. Furthermore, the U.S. Energy Information Administration (EIA) reported a substantial increase in U.S. commercial crude oil inventories, reaching their highest level since 1982, with a rise of 14.4 million barrels to a total of 482.6 million barrels for the week ending October 28. This exceeded analysts’ expectations, which had projected an increase of only 1 million barrels. As a result, both WTI and Brent crude oil prices experienced declines of 2.9% and 2.7%, respectively, settling at $45.34 per barrel and $46.86 per barrel. These lower oil prices contributed to a 1.1% loss for the Energy Select Sector SPDR (XLE). Within the Dow, Chevron Corporation (CVX) and Exxon Mobil Corporation (XOM) recorded declines of 1% and 0.2%, respectively. Additionally, the monthly jobs survey conducted by payroll services firm Automatic Data Processing (ADP) reported an increase of 147,000 private-sector jobs in October. Investors eagerly awaited the monthly jobs report scheduled for release on Friday.

Noteworthy Stock Developments:

Wynn Resorts Ltd. (WYNN) reported third-quarter 2016 results that fell short of expectations, with both earnings and revenues failing to meet the Zacks Consensus Estimate. Avis Budget Group Inc. (CAR) released its third-quarter 2016 results, marking record-breaking growth in both earnings and sales, which exceeded expectations and led to a surge in stock prices. Avon Products Inc. (AVP) reported third-quarter 2016 adjusted earnings from continuing operations below the Zacks Consensus Estimate. Qualcomm Inc. (QCOM) delivered impressive financial results for the fourth quarter of fiscal 2016, surpassing both revenue and earnings estimates. S&P Global, Inc. (SPGI) announced third-quarter 2016 adjusted earnings per share and revenues that beat the Zacks Consensus Estimates.

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