Stock Market News For October 24, 2016

Following mixed earnings results, major indexes ended a choppy trading session mostly in the red on Friday. The S&P 500 and the Dow closed in negative territory after GE’s weaker than expected revenue growth dampened investor sentiment. The Nasdaq, on the other hand, settled in the green primarily due to Microsoft’s stellar performance. Shares of the software giant hit record highs buoyed by first quarter sales and earnings that topped analysts’ expectations. For the week, all the three indexes notched gains.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) decreased 0.09%, to close at 18,145.71. The S&P 500 fell a meagre 0.01% to close at 2,141.16. The tech-laden Nasdaq Composite Index closed at 5,257.40, increasing 0.3%. The fear-gauge CBOE Volatility Index (VIX) declined 5.4% to settle at 13.01. A total of around 3.4 billion shares were traded on Friday on the NYSE. Advancers marginally outpaced declining stocks on the NYSE. For 49% stocks that advanced, 47% declined.

GE’s Revenue Miss Expectations

General Electric Company’s (GE) third quarter earnings per share of 32 cents came in ahead of the Zacks Consensus Estimate by a penny. However, its revenues of $29,266 million missed the Zacks Consensus Estimate of $29,836 million. Not only that, the company also cut its full-year revenue growth target and narrowed its profit forecast.

Organic revenue growth for this year is currently expected to be 0-2% compared to earlier projections of 2-4%. The company anticipates operating earnings in 2016 to be within $1.48-$1.52 a share, compared to its earlier range $1.45-$1.55. Shares of GE declined 0.3% (read more: GE Beats Q3 Earnings, Misses Revenues; 2016 View Narrowed).

Microsoft at an All-Time High

Shares of Microsoft Corporation (NASDAQ:MSFT) (MSFT) hit an all-time intra-day high of $60.45 on Oct 21, trumping its previous record set in 1999. It eventually closed at $59.66, above its previous record close of $59.56. During the trading session, the stock gained 4%, its best one-day percentage gain since July 20. More than 79.9 million shares changed hands, way above the stock’s 30-day average trading volume of around 25 million shares.

Microsoft surged to record highs after its fiscal first-quarter results beat Street estimates. First-quarter fiscal 2017 revenues of $22.33 billion beat the Zacks Consensus Estimate of $21.54 billion. Earnings per share of 76 cents also surpassed the consensus mark of 68 cents (read more: Microsoft Stock Soars to New All-Time High).

Cloud Boosts Revenues

Growing demand for cloud-based software and services were cited to be the main reasons for the stellar quarterly performance. Chief Executive Officer Satya Nadella has been investing in data centers for a considerable period of time to bolster sales of Microsoft’s main cloud products including Azure and Office 365.

Revenues from Azure cloud platform soared 121% in the reported quarter from year-ago levels, which eventually boosted Microsoft’s Intelligent Cloud unit. Revenues from Intelligent Cloud unit were $6.38 billion, up 8.3% year over year. The commercial business which includes Office 365 & other related cloud services also saw revenues climb 5% from year-ago levels (read more: Microsoft Beats Q1 Earnings on Strong Cloud Growth).

The broader Technology Select Sector SPDR (XLK) gained 0.3% on Friday, mostly led by the group’s biggest companies including Microsoft. The software giant possess a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Modest Weekly Gains

For the week, the Dow, the S&P 500 and the Nasdaq gained 0.04%, 0.4% and 0.8%, respectively. A slew of better-than-expected earnings results from heavyweights Morgan Stanley (NYSE:MS) (MS), Goldman Sachs Group Inc (NYSE:GS) (GS), Johnson & Johnson (NYSE:JNJ) (JNJ), Netflix (NASDAQ:NFLX), Inc. (NFLX) and UnitedHealth Group Inc (NYSE:UNH) (UNH) helped the broader markets settle in the green. Separately, the Fed’s Beige Book stated that the overall U.S. economy is expanding at a moderate pace, while a pick-up in inflation raised December rate hike chances.

Stocks That Made Headlines

T-Mobile US Tops Q3 Earnings Estimates, Lifts View

T-Mobile US Inc. (TMUS) reported mixed financial results in the third quarter of 2016, with both the top and the bottom line surpassing the Zacks Consensus Estimate. (Read More)

Brown & Brown Q3 Earnings Top on Higher Revenues

Brown & Brown Inc. (BRO) reported third-quarter 2016 earnings per share of 52 cents per share, 3 cents above the Zacks Consensus Estimate. (Read More)

V.F. Corp. Misses Q3 Earnings & Sales, Trims View

V.F. Corporation (VFC) released third-quarter 2016 results, wherein the company’s quarterly adjusted earnings came in at $1.14 a share, missing the Zacks Consensus Estimate of $1.15. (Read More)

Genworth and China Oceanwide Sign $2.7B Acquisition Deal

Genworth Financial, Inc. (GNW) recently announced that it has inked a definitive agreement with China Oceanwide Holdings Group Co., Ltd. to be acquired by the latter for $2.7 billion. (Read More)

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