Hertz So Good?

By Jeffrey Cane |  Wednesday, October 27

Not Today. Quarterly earnings have been impressive enough to make investors put aside worries they may have about economic growth, inflation, supply-chain snags, or Covid. Today, earnings were just not enough. 

Stocks sold off in the last hour of trading, and the S&P 500 and Dow Jones Industrial Average ended lower, a day after closing at new records. The S&P 500 fell 0.5%, and the Dow, 0.7%. The Russell 2000 slumped 1.9%. 

The Nasdaq Composite did eke into positive territory, but by less than a point, buoyed by the stellar showings from Microsoft (up 4.2%) and Alphabet (up 4.8%). The Nasdaq has a three-day winning streak going, and has been up nine of the last 11 trading sessions. 

Growth stocks outperformed value. Consumer discretionary was the only S&P 500 sector to end in the green.  

Energy was the worst-performing sector, as crude oil prices fell 2.4%, to $82.66 a barrel. Refiners were among the hardest hit. Phillips 66 was down 5.9%, and Valero Energy was down 4%. Exxon Mobil fell 2.6%. Alternative energy, however, was a bright spot. Enphase Energy led the S&P 500,  jumping 24.7%, after its quarterly results blew past forecasts, lifting other solar stocks. 

A flattening yield curve weighed on financial stocks. The yield on the two-year Treasury note rose to 0.491%, a fresh 52-week high, while the yield on the 10-year fell to 1.528%, its sharpest one-day decline since July. Goldman Sachs lost 1.6%, and JPMorgan Chase declined 2.1%. Visa tumbled 6.9% following a Wall Street Journal report that antitrust investigators are examining its ties to fintechs. Those three financial companies accounted for a nearly 173-point drop in the Dow. 

There was no great narrative driving the market today, though there were dozens if not hundreds of individual stories, nearly all of them about earnings: Coca-Cola, McDonald's, General Motors, Boeing, and Spotify  Technology were among the ones Barron's covered today.  Tomorrow the earnings focus will again be on Big Tech, with Amazon.com and Apple reporting after the close. 

In other markets, gold edged up 0.3%, to $1,798.10 an ounce. The U.S. dollar was slightly weaker against other major currencies. And Bitcoin was lower, trading around $58,957 this afternoon.