On The Fly: Stocks end week higher as earnings season kicks off
Stocks ended the week higher as traders assessed mixed corporate earnings amid optimism on increased deal activity. MACRO NEWS: In the U.S., the Empire State manufacturing index dropped 4.8 points to -6.8 in October. Industrial production rose 0.1% in September. The consumer price index rose 0.3% in September, while the core CPI excluding food and energy components was up 0.1%. The National Association of Home Builders' sentiment index dipped 2 points to 63 in October. The MBA's mortgage applications composite index rose 0.6% for the week ending October 14. Housing starts fell 9% in September, but building permits for privately owned housing units rose 6.3%. The Fed's Beige Book showed that economic activity continued to expand. "Most Districts indicated a modest or moderate pace of expansion," it read. Initial jobless claims rose 13,000 to 260,000 in the week ended October 15. The Philadelphia Federal Reserve's index of business conditions came in at 9.7 this month. Existing home sales rose 3.2% to a 5.47M rate in September. In Canada, retail sales fell 0.1% in August. In Europe, the U.K. consumer price index rose 1% in September. U.K. retail sales volumes grew by 1.8% on the quarter. German producer prices fell 0.2% in September. Eurozone consumer confidence rose as expected to -8.0 points in October. In Asia, China's third quarter GDP grew 6.7%. COMPANY NEWS: Caterpillar (CAT) announced that its Chairman and CEO Doug Oberhelman has elected to retire, effective next year, after more than 41 years with the company... Pepsico (PEP) Chairman and CEO Indra Nooyi unveiled an ambitious target to slash sugar and cut calories as the company looks to counter health concerns about sugar-sweetened beverages and respond to changing consumer preferences. PepsiCo expects that at least two-thirds of the company's beverages will contain 100 calories or less per 12-ounce serving by 2025... LendingClub (LC) announced that it is raising interest rates and is tightening its credit policies for the second time in the last six months as delinquencies climb... A presentation included in leaked emails from Colin Powell, who sits on the Salesforce (CRM) board of directors, indicate the company was looking at 14 potential acquisition targets in May, according to The Wall Street Journal. Among the names were Demandware (DWRE), which Salesforce agreed to acquire in June, Adobe (ADBE), Pegasystems (PEGA), ServiceNow (NOW), Tableau Software (DATA), Marketo (MKTO), NetSuite (N), Qlik (QLIK), Box (BOX), Zendesk (ZEN), Workday (WDAY) and LinkedIn (LNKD), which has agreed to be acquired by Microsoft (MSFT). Twitter (TWTR) was not named in the presentation, the Journal noted... Tesla (TSLA) announced that all of the vehicles it produces going forward will be equipped with self-driving hardware. The company said that it would further test its self-driving technologies before activating them in each of its vehicles... Alkermes (ALKS) said its ALKS 5461 for the treatment of major depressive disorder in patients not helped by standard antidepressants met the main goal in a third late-stage trial. In M&A news, AT&T (T) is in advanced talks to acquire Time Warner (TWX) and a deal could be reached as soon as this weekend, according to The Wall Street Journal. The report follows Bloomberg's account on Thursday that executives from both companies have met in recent weeks to discuss possible strategies, including a possible merger... Almost Family (AFAM) announced that it has signed a definitive agreement to acquire a controlling interest in the home health and hospice assets of Community Health Systems (CYH)... Reynolds American (RAI) received a non-binding proposal from British American Tobacco (BTI) to purchase the approximately 58% of the former's common stock that the latter does not currently own. Similar to other major U.S. banks that reported earnings last week, Bank of America (BAC) announced better than expected third quarter earnings per share and revenue... Goldman Sachs' (GS) also beat expectations, as the bank's commitment to fixed income trading paid off in the third quarter, with revenue from the business surging 49%... Additionally, Morgan Stanley (MS) posted better than expected profit boosted by a surge in bond trading... Banc of California (BANC) reported better than expected third quarter earnings, raised its 2016 earnings per share outlook and demanded the removal and retraction of a Seeking Alpha cautious article that the bank's lawyers call "inaccurate" and "malicious." Among other companies that announced quarterly results this week, Netflix (NFLX), Hasbro (HAS), UnitedHealth (UNH), Del Taco Restaurants (TACO), Domino's Pizza (DPZ), Walgreens Boots Alliance (WBA), American Express (AXP), United Rentals (URI), Mattel (MAT), Microsoft, PayPal (PYPL), and McDonald's (MCD) advanced following their reports, while IBM (IBM), Johnson & Johnson (JNJ), Intel (INTC), Cree (CREE), Verizon (VZ), eBay (EBAY), General Electric (GE), and Skechers (SKX) declined. INDEXES: For the week, the Dow rose 0.04% to 18,145.71, the Nasdaq advanced 0.81% to 5,257.40, and the S&P 500 gained 0.38% to 2,141.16.