Financial Review
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DOW + 215 = 16,614
SPX + 37 = 1941
NAS + 103 = 4419
10 YR YLD + .03 = 2.21%
OIL + .64 = 82.55
GOLD + 2.50 = 1250.40
SILV + .09 = 17.62
In economic news, the National Association of Realtors reports sales of existing homes rose 2.4% in September to a seasonally adjusted annual rate of 5.17 million, hitting the fastest pace in one year and rebounding from an unexpected drop in August. However, September’s pace of sales was down 1.7% from a year earlier. So, the housing market isn’t roaring, but lower interest rates managed to pull some buyers off the sidelines last month.
Low interest rates are just part of the equation in the housing market; buyers also need to be employed. The Labor Department today released state unemployment numbers, and in 15 states, the unemployment rate is now under 5%; that list includes: North Dakota at 2.8%, South Dakota at 3.4%, Utah 3.5%, and Nebraska, Minnesota, Hawaii, New Hampshire, Vermont, Idaho, Iowa, Montana, Dolorado, Oklahoma, Wyoming, and Kansas. Georgia has the highest unemployment rate at 7.9%. Arizona made the bottom 10 with a 6.9% unemployment rate, a full percentage point higher than the national average.
Reuters reported the European Central Bank was looking at buying corporate bonds as soon as December in its efforts to revive the Eurozone economy. The move to buy corporate debt reinforced the idea that ECB President Mario Draghi really will increase the ECB’s balance sheet by a significant amount. The euro fell against the dollar.
China reported third quarter Gross Domestic Product rose 7.3%, which is down from 7.5% growth in the second quarter, but still better than most estimates. The positive news out of China and Europe lifted overseas equity markets and the US markets moved higher from the open. Also, lifting US markets, was a good earnings report late yesterday from Apple. And yes, Apple is big enough to move markets, especially combined with decent economic news.
The earnings news today has been a mixed bag. McDonald’s reported third quarter profit fell 30% and sales were down for a fourth straight quarter. Net income dropped to $1.07 billion, or $1.09 a share, from $1.52 billion, or $1.52, a year earlier. Sales at US and global stores fell 3.3% for the quarter. And this is now turning into a trend for McDonald’s.
Coca Cola reported 3Q sales fell slightly from $12 billion a year ago to $11.98 billion. Third-quarter net income fell 14% to $2.1 billion, or 48 cents a share, from $2.4 billion, or 54 cents, a year earlier. And so, Coke announced a $3 billion cost cutting plan that includes selling company owned distribution territories back to independent bottlers over the next 3 years.
