Stocks struggled for a second straight day, as investors continue to price in recent economic data suggesting the Federal Reserve may not need to be as aggressive in its rate-cutting cycle. A mixed batch of earnings reports also kept sentiment in check.
Treasury yields were higher again on Tuesday following Monday's surge, with the 10-year topping 4.2% for the first time since July before stabilizing around that level.
Bond traders continue to adjust their bets on monetary policy and the impact of the presidential campaign in the U.S. on fiscal policy, putting upward pressure on market interest rates in Europe and Asia too.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The ICE BofA Move Index, which is built to track expected Treasury market moves, is now at its highest level in 2024, rising on stronger-than-expected growth data and reduced expectations for accommodative policy from the Federal Reserve.
Though equity indexes drifted higher today on what is, on balance, good news, bond market volatility will likely persist through November 5, at least as long as the outcome of the contest for the White House is in doubt.
We continue to track policy proposals from the campaign trail and their potential impact on your finances on our live election blog.
Blue chip earnings roll in
Meanwhile, on the earnings front, U.S. industrial heavyweights GE Aerospace (GE) and General Motors (GM) went in two different directions after their results.
Specifically, GE posted earnings per share (EPS) of $1.15 on revenue of $9.6 billion, topping Wall Street's forecast of earnings $1.13 per share on revenue of $9 billion. Adjusted operating profit margin improved to 25.7% from 23.9% a year ago.
GE says full-year operating profit will be $6.7 billion to $6.9 billion versus a prior range of $6.5 billion to $6.8 billion, and EPS will be $4.20 to $4.35 against a previous estimate of $3.95 to $4.20. Wall Street expects to see EPS of $4.24. Shares closed down 9.1% today.
GM, on the other hand, jumped 9.8% – its best day of the year – after its beat-and-raise quarter. The automaker posted EPS of $2.96 on revenue of $48.8 billion, beating Wall Street's forecast for $2.38 on revenue of $44.7 billion. Reported operating profit of $4.1 billion dwarfed the Street's $3.3 billion estimate.
GM posted operating profit of $3.6 billion and EPS of $2.28 on revenue of $44.1 billion a year ago.
CEO Mary Barra noted in her quarterly letter to shareholders that GM "grew U.S. retail market share with above-average pricing, well-managed inventories, and below-average incentives."
Barra also said GM is on track to meet its annual targets for electric vehicle production and profitability.
Broad fundamental strength seemed to show up through the day, as the S&P 500 Index gradually recovered from its opening-bell gap-down to pare its loss to 0.05% and closed at 5,851.
Elsewhere, Verizon Communications (VZ) was a little light on third-quarter revenue, though adjusted earnings per share and net new mobile phone subscriptions exceeded expectations.
Verizon was the worst Dow Jones stock today because it beat Wall Street's EPS forecast but narrowly missed the top-line target.
Management posted adjusted EPS of $1.19 on revenue of $33.3 billion, while analysts wanted to see $1.18 on $33.4 billion. Verizon posted adjusted EPS of $1.22 on revenue of $33.3 billion a year ago.
Customer additions of 239,000 exceeded a Street forecast of 221,000, and total broadband connections grew by 16%.
The main drag during the three months ended September 30 was an 8.1% year-over-year decline in wireless equipment revenue on lower upgrade volumes.
Management reiterated full-year guidance for EPS of $4.50 to $4.70 per share. Wall Street's forecast is $4.59.
The No. 1 U.S. telecom fell 5%, though strength across the other 29 Dow Jones Industrial Average components helped limit the day's decline to 0.02%. The Dow closed at 42,924.
The Nasdaq Composite closed in the green, surging after the lunch hour and eking out a 0.18% gain to 18,573, even though Nvidia (NVDA, -0.1%) backed off from record-high levels.
Looking ahead
Nvidia's market capitalization remains above $3.5 trillion. And though the stock traded a little bit lower on Tuesday, the look-through from German software giant SAP (SAP, +1.2%) on artificial intelligence capex spending by Big Tech is encouraging.
SAP reached a new all-time high on Tuesday after it reported a 27% year-over-year rise in third-quarter adjusted operating profit and management raised its full-year outlook.
CEO Christian Klein said that approximately 30% of SAP's cloud contracts in the third quarter included AI use scenarios.
Analysts at JPMorgan said SAP's results provide "a read-across to the health of Enterprise IT spending," citing similar trends for software rivals such as Microsoft (MSFT).
Microsoft is scheduled to report its fiscal first-quarter results after the closing bell on October 30.
Nvidia will report its fiscal third-quarter results on November 20.
Related content
- Mark Cuban, Kamala Harris, and Taxing Unrealized Gains
- Best Stocks To Buy Now
- The Best Growth Stocks to Buy
-
Cord Cutting Could Help You Save Over $10,000 in 10 YearsHow cutting the cord can save you money and how those savings can grow over time.
-
The '8-Year Rule of Social Security' — A Retirement RuleThe '8-Year Rule of Social Security' holds that it's best to be like Ike — Eisenhower, that is. The five-star General knew a thing or two about good timing.
-
Cord Cutting Could Help You Save Over $10,000 in 10 Years
How cutting the cord can save you money and how those savings can grow over time.
-
Should I Buy Stocks or Should I Buy Bonds Right Now?Generally speaking, stocks provide reasonable growth while bonds provide stable income. Each play important roles in diversified portfolios.
-
You Were Planning to Retire This Year: Should You Go Ahead?If the economic climate is making you doubt whether you should retire this year, these three questions will help you make up your mind.
-
Are You Owed Money Thanks to the SSFA? You Might Need to Do Something to Get ItThe Social Security Fairness Act removed restrictions on benefits for people with government pensions. If you're one of them, don't leave money on the table. Here's how you can be proactive in claiming what you're due.
-
From Wills to Wishes: An Expert Guide to Your Estate Planning PlaybookConsider supplementing your traditional legal documents with this essential road map to guide your loved ones through the emotional and logistical details that will follow your loss.
-
Why Investing Abroad Could Pay OffCountries overseas are stimulating their economies, and their stocks are compelling bargains.
-
Are These the Next Stocks to Split?Interactive Brokers' recently split its stock to makes its shares more accessible to investors. Could these high-priced stocks be next?
-
Your Home + Your IRA = Your Long-Term Care SolutionIf you're worried that long-term care costs will drain your retirement savings, consider a personalized retirement plan that could solve your problem.
