Stocks began in a bullish fashion and proceeded to hit their highest levels in four weeks after the first set of major reports of the third quarter earnings season beat expectations. The Dow was helped in particular by UnitedHealth (UNH) and JPMorgan (JPM), which both jumped in the wake of their earnings beats. The earnings optimism was more than enough to offset some of the day's less positive news, including the fact that the IMF cut its global growth forecasts for this year and next, citing trade uncertainties.
ECONOMIC EVENTS: In the U.S., the Empire State manufacturing index rose 2 points to a reading of 4 in October.
Additionally, the International Monetary Fund lowered its global growth outlook due to the negative effects of trade tensions. The IMF cuts its 2019 growth forecast to 3.0% from 3.2% in its prior view in July, while the 2020 projection was cut to 3.4% from 3.5% previously.
TOP NEWS: Among the four big banks that kicked off earnings season for the money centers, shares of JPMorgan reacted most favorably, rising 3%. Wells Fargo (WFC) and Citi (C) both traded higher as well, up 1.7% and 1.4% respectively, following their own quarterly reports. Goldman Sachs (GS) was the standout to the downside before ending in positive territory following the investment bank's lower than expected headline earnings.
In other bank news, Bank of America (BAC) shares rose 2% after Bloomberg reported that Warren Buffett's Berkshire Hathaway (BRK.A) is seeking permission from the Federal Reserve to potentially increase its stake in the lender to over 10%. Berkshire filed an application with the Fed recently making a variety of assurances to demonstrate that it will passively invest in the lender, according to Bloomberg.
Johnson & Johnson (JNJ), which reported better than expected third quarter revenue and earnings, attributed its "strong performance" to "competitive underlying growth in Pharmaceuticals and Medical Devices." J&J, which also raised its fiscal year adjusted earnings view, said it sees no need for added legal reserves amid the series of lawsuits it is facing. J&J shares were 1.6% higher at the close.
Meanwhile, shares of General Motors (GM) were up 2.1% amid reports that the car maker and the United Auto Workers union had moved closer to reaching a tentative agreement. Bloomberg later reported that, as part of negotiations, GM has agreed to make temporary employees permanent after three consecutive years worked.
MAJOR MOVERS: Among the noteworthy gainers was UnitedHealth, which gained 8.2% after reporting better than expected quarterly results and raising its guidance. Also higher was Reata Pharmaceuticals (RETA), which jumped 57% after announcing that the registrational Part 2 portion of the MOXIe Phase 2 trial of omaveloxolone in patients with Friedreich's ataxia met its primary endpoint. Also higher was
Among the notable losers was PagSeguro (PAGS), which dropped 12.3% after shareholder Universo Online proposed to sell 16.75M shares and after the company announced preliminary third quarter results. Also lower was Whiting Petroleum (WLL), which fell 7.2% after Wolfe Research analyst Josh Silverstein downgraded the stock to Underperform.
INDEXES: The Dow rose 237.44, or 0.89%, to 27,024.80, the Nasdaq gained 100.06, or 1.24%, to 8,148.71, and the S&P 500 advanced 29.53, or 1.00%, to 2,995.68.
