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Mixed Outing in the Midweek Session
01-Nov-17 16:30 ET
Dow +57.77 at 23435.01, Nasdaq -11.14 at 6716.52, S&P +4.10 at 2579.36

https://www.briefing.com/investor/markets/stock-market-update/2017/11/1/mixed-outing-in-the-midweek-session.htm

[BRIEFING.COM] Stocks touched record highs at Wednesday's opening bell, but the bullish sentiment was quickly stifled, leaving the market little changed. The major indices finished the session mixed, settling in the lower half of their trading ranges. The Dow and the S&P 500 added 0.3% and 0.2%, respectively, while the Nasdaq slipped 0.2%. Small caps struggled, sending the Russell 2000 lower by 0.7%.

The Federal Open Market Committee announced its latest policy decision on Wednesday afternoon, but the event came and went without much impact on the financial markets. As expected, the FOMC voted unanimously to leave the fed funds target range at 1.00%-1.25% and reiterated its belief that the economy will continue to expand at a moderate pace.

Wednesday's policy statement did little to alter the market's belief that the Fed will hike rates at the December FOMC meeting, evidenced by the CME FedWatch Tool--which places the chances of a December rate hike at 98.2%. On a related note, President Trump is expected to unveil his Fed Chair nominee on Thursday, with reports indicating that it'll likely be Fed Governor Jerome Powell.

In addition, House Republicans say they'll release their tax reform bill on Thursday--one day later than their original self-imposed deadline.

Energy stocks led Wednesday's modest rally, even though WTI crude futures declined 0.4% to $54.18/bbl. Crude oil held a gain of more than 1.0% early in the session, but moved back to its flat line after the Energy Information Administration reported that U.S. crude stockpiles declined by 2.4 million barrels last week. Still, the commodity finished near an eight-month high.

The S&P 500's energy sector added 1.1%, but gains from the other groups were pretty modest. The consumer staples space was one of the top performers outside of energy, adding 0.3%, thanks in part to cosmetic giant Estee Lauder (EL 122.12, +10.31), which surged 9.2% on better-than-expected earnings and revenues.

Meanwhile, the materials sector (+0.6%) also outperformed, with DowDuPont (DWDP 73.32, +1.01) adding 1.4% before its Thursday morning earnings release.

On the flip side, Apple (AAPL 166.89, -2.15) struggled on Wednesday, losing 1.3%, following three straight sessions of big gains. The tech giant will report earnings on Thursday evening and goes into Thursday's session with an incredible year-to-date gain of 44.1%. With a market cap of around $860 billion, Apple is the largest component within the S&P 500.

Telecom stocks continued their bearish 2017 campaign in the midweek session, with CenturyLink (CTL 17.85, -1.14) pacing the retreat. The company finished with a loss of 6.0% after completing its acquisition of Level 3 Communications--a process that took nearly a year. The S&P 500's telecom services sector declined by 0.5%, extending its year-to-date loss to 16.4%.

In the bond market, U.S. Treasuries finished mostly lower, but longer-dated issues showed relative strength. The yield on the 2-yr Treasury note climbed four basis points to 1.63%, while the benchmark 10-yr yield finished flat at 2.38%. Generally speaking, Treasuries ticked lower following the Fed's policy release. Meanwhile, the U.S. Dollar Index finished higher by 0.3% at 94.69.

Reviewing Wednesday's economic data, which included the October ADP Employment Change Report, the October ISM Index, September Construction Spending, and the weekly MBA Mortgage Applications Index:

The ADP National Employment Report showed an increase of 235,000 in October (Briefing.com consensus 215,000). The September reading was left unrevised at 135,000.
The ISM Index for October declined to 58.7 from an unrevised reading of 60.8 in September, while the Briefing.com consensus expected a downtick to 59.0.
The key takeaway from the report is that manufacturing conditions remain solid, as the October dip is most likely just a cooling off from what was a very hot September reading.
The Construction Spending report for October rose 0.3%, while the Briefing.com consensus expected a decrease of 0.2%. The prior month's increase was revised to 0.1% from 0.5%.
The key takeaway from the report is that overall construction spending remains modest and an inhibitor of stronger real GDP growth.
The weekly MBA Mortgage Applications Index decreased 2.6% to follow last week's 4.6% decline.

On Thursday, investors will receive the weekly Initial Claims Report (Briefing.com consensus 235K), third quarter Productivity (Briefing.com consensus 2.8%), and third quarter Unit Labor Costs (Briefing.com consensus 0.0%)--all of which will be released at 8:30 ET.

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