Stocks closed out the week and began a new month in quiet fashion. The S&P 500 gained 0.29% and the NASDAQ 0.08%. The Russell 2000 (small cap stocks) was weak again, down 0.41%; this is a bit of a concern as this index was down over 2% for the week while the senior indexes were both about flat on the week. Generally you want to see small caps in a leadership position. It is something to monitor. On the economic front the main report of the day was ISM Manufacturing which came in better than expected at 56.4, up from 56.2 in September. Any reading over 50 signals expansion.
The S&P 500 and NASDAQ are both fine thus far - they are digesting a massive move on the month. If the S&P 500 sits and holds this trend line it will be a very strong showing. The NASDAQ looks to continue to push its head along this year long trendline - both are near their 10 day moving averages.
Of more concern is the Russell 2000 which is showing a lot of relative weakness; you can see the chart weakening significantly more than the other indexes. It broke its 20 day moving average intraday but came back late in the day to come back to this level of support. If it falters next week below it we have to raise some caution flags.
There was also a curious rally in the 10 year yield, it seemed like a big move from this 1 data economic data point; we saw it rise over 2.6%.
It's been a few weeks since we looked at oil, but look at this selloff since Syrian tensions were reduced; this is good for the consumer but generally a good global economy would mean strong oil. So it is curious.
Insurance giant AIG (AIG) was in the news with its earnings; obviously the market did not like it much.
AIG said that its quarterly profit rose 17 percent as its core insurance business improved, meeting the market's profit forecasts. But it said that its property and casualty unit paid out more in claims than it took in during the third quarter. It reported a combined ratio of 101.6 in its property and casualty operation. A number below 100 indicates an underwriting income; more than 100 means it had a loss.
After some selling the past few weeks, solar stocks were back in action as First Solar (FSLR) reported a quarter investors liked.
Sales of solar power plants First Solar built in Canada, and accelerated recognition of revenue from a plant under construction in California will boost per-share profit for the year to $4.25 to $4.50 a share, up from an August estimate of $3.75 to $4.25, Chief Executive Officer Jim Hughes said yesterday on a conference call with analysts and investors. First Solar also reported third-quarter net income doubled to $195 million, or $1.94 a share, from $87.9 million, or $1, a year earlier. That beat the 95-cent average of 13 analysts.
Have a good weekend, and we'll see you back here next week.