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The Dow Jones jumped more than 1% Tuesday, adding 215 points on the day. The Nasdaq soared more than 2% on the day, buoyed by Apple's strong earnings. The S&P 500 Volatility Index (VIX) dipped another 11% on the day.
Dow: 16,614.81, +215.14 (+1.31%)
S&P 500: 1,941,28, +37.27 (+1.96%)
Nasdaq: 4,419.48, +103.40 (+2.40%)
What moved the markets: The Dow Jones rose on stronger corporate earnings and speculation that the European Central Bank may soon introduce new stimulus measures to beat back concerns about growth in the region. The S&P 500 had its fourth consecutive winning session, boosted by strong corporate earnings, especially the report filed afterhours yesterday by Apple Inc. (Nasdaq: AAPL). Shares of Apple were up more than 2.5% on the day, buoyed by strong iPhone 6 sales and a strong holiday outlook. The Nasdaq was boosted by strong – and surprising – earnings reports from a number of other tech and biotech companies, including Illumina Inc. (Nasdaq: ILMN). Shares of Illumina were up more than 9% after the company reported strong earnings and received an upgrade from JMP Securities.
Most notable economic news: Sales of existing U.S. homes struck a one-year high in September. The news is another sign that the housing market continues to recover from the Great Recession. Although year-to-date sales remain down 1.7% compared to this time in 2013, prices are on the rise. The existing median home price is up 5.6% compared to this time last year, and it is fast approaching the median price of existing homes prior to the financial crisis.
Now, here's a breakdown of today's other top stories and stock performances:
- The Real Apple Winner: Shares of NXP Semiconductors NV (Nasdaq: NXPI) were up another 5% on the day. The chipmaker soared on news that Apple Inc. has reported stronger than expected iPhone 6 sales and has ramped up its orders to meet an expected surge in holiday demand. As our Silicon Valley technology expert Michael A. Robinson has said several times, NXP Semiconductors is poised to benefit from the growth of Apple Pay and the oncoming surge in consumers ditching their traditional wallets for the more secure digital wallet.
- Soda Slump: Shares of The Coca-Cola Co. (NYSE: KO) fell 6% and gave up any gains it once had in 2014. The soft drink giant reported a quarterly profit decline of 14% and cited growth concerns tied to the general global economy. The company introduced a number of cost-cutting measures, including a timeline for the pending sales of nearly two-thirds of its bottling operations. The company is facing headwinds from macroeconomic weakness in emerging markets and the curtailing of consumer spending in the U.S. and Eurozone economies.
- Time to Print: With speculation that China and Europe may boost stimulus efforts to offset anticipated weakness in the regions, don't leave the U.S. central bank out of the printing party. This morning, strategists at Bank of America Corp. (NYSE: BAC) posited in a research report that the S. Federal Reserve could launch another round of quantitative easing. The report suggests that the central bank may move if the U.S. markets see another 10% drop in stock prices. BAC says that such a decline would match the conditions in 2010 and 2011 when the Fed took action. According to the report, the bank introduced a round of easing after a 11% downturn in 2010, and another round after a 16% drop in 2011.
- Falling Giant: Shares of McDonald's Corp. (NYSE: MCD) slipped 0.6% on Tuesday after the company reported slipping earnings, revenue, and income in the third quarter. The company reported earnings per share (EPS) of $1.09 for the quarter. That missed analysts' estimates of $1.37. Last year, McDonald's had Q3 EPS of $1.52. McDonald's is still reeling on the international front, as its sales in China have plummeted since a scandal involving tainted meat from its supplier rocked the fast food world. Same-store sales in the APMEA (Asia, Pacific, Middle East, Africa) market fell 9.9% in Q3 2014. Operating income in the region slumped 55%. Here's a full recap of McDonald's earnings and how to play MCD stock now.
- Tragedy in Moscow: Shares of Total SA(NYSE ADR: TOT) were up nearly 3% the day after its chief executive officer died when his private jet collided with a snowplow at a Russian airport. Christophe de Margerie, three crewmembers, and the plow driver were killed as the plane was taking off from Moscow's Vnukovo airport. The former CEO was a staunch opponent of Western sanctions against Russian interests and was in Moscow to meet with 30 other executives at the home of Russian Prime Minister Dmitry Medvedev. Total's board is meeting to appoint a successor for France's second-largest publicly traded company.
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.