Market Down Again as Pre-Election Deal Looks "Difficult"

Mixed earnings reports and the ongoing saga of stimulus combined to send stocks lower for a second consecutive session on Wednesday.

The Dow slipped by 0.58% (or about 165 points) today to 28,514 exactly, while the S&P dipped 0.66% to 3488.67. These losses were only slightly worse than yesterday’s.

On the other hand, the NASDAQ went from the smallest decline on Tuesday to the sharpest one today. The index dropped 0.80% (or about 95 points) to 11,768.73.

Apple (AAPL), which unveiled its first iPhone with 5G wireless connectivity yesterday, managed to eke out a 0.07% advance after slipping more than 2.65% the day earlier. However, it’s still up solidly for the week thanks to Monday’s more than 6% jump.

The worst-performing FAANG was actually Amazon (NASDAQ:AMZN), which slipped over 2.3% on the second day of its Prime Day event.

The financials continued going to the plate on Wednesday here in the beginning days of earnings season. The results were mixed and the reaction from an already down-in-the-dumps market was muted.

Goldman Sachs (GS) beat expectations, but only gained 0.20%. Bank of America (NYSE:BAC) missed revenue expectations and Wells Fargo (NYSE:WFC) fell short on earnings, leading to declines of 5.3% and 6%, respectively.

The sour mood probably stemmed from Treasury Secretary Mnuchin stating that a stimulus deal before the election would be “difficult”. However, the two sides are still talking and using optimistic words like “productive” to describe the meetings.

Tomorrow’s earnings reports include the likes of Morgan Stanley (NYSE:MS), Taiwan Semiconductor (TSM), Honeywell (NYSE:HON), Intuitive Surgical (NASDAQ:ISRG) and Walgreens (WBA), among many others.

Today's Portfolio Highlights:

Home Run Investor: This portfolio had no exposure to agriculture... until today! In a move to add some diversification to the service, Brian picked up The Andersons (NASDAQ:ANDE). This Zacks Rank #2 (Buy) is a regional grain merchandiser with varied businesses in agriculture, plant nutrient formulation and distribution, turf product production, railcar marketing and general merchandise retailing. The company beat by 1660% in its most recent quarter, which sent shares and earnings estimates higher. Analysts still expect a loss for this year, but the deficit has narrowed to three cents from 39 cents in the past two months. So another good report could mean a swing into profitability. Expectations for next year are all the way up to a profit of $1.80. See the complete commentary for more on today’s action.

Surprise Trader: In the past two quarters, Herc Holdings (NYSE:HRI) soared past the Zacks Consensus Estimate by triple-digits both times. No one knows if this full-line equipment-rental supplier can keep these lofty surprises going, but we do know that odds are good for another beat. This Zacks Rank #2 (Buy) has a positive Earnings ESP of 22.89% for the report coming before the bell on Thursday, October 22. Dave decided to add HRI on Wednesday with a 12.5% allocation. Read the full write-up for more.

Options Trader: "The absence of an imminent (stimulus) deal, of course, removes the immediate upward catalyst for the market.

"But with earnings season just beginning, traders will be turning their focus to that. And since the market typically goes up during earnings season, that's a new potential upward catalyst the market has going for it.

"Tomorrow we'll get a look at Weekly Jobless Claims, Import and Export Prices, the Philadelphia Fed Manufacturing Index, and the Empire State Manufacturing Index.

"And with earnings season underway, we'll get another 101 companies reporting earnings between Thursday and Friday, and another 525 companies reporting earnings next week." -- Kevin Matras

All the Best,
Jim Giaquinto