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T3's Take 3: Stocks Churn Ahead of Apple and the Fed


Today's financial recap and tomorrow's financial outlook.


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Churning Time

Stocks leaned to the weak side today as traders waved the caution flag ahead of Apple's (AAPL) earnings report after the close today and the Fed's rate policy announcement tomorrow.

The S&P 500 closed down 0.3% at 2065.89, while the NASDAQ fell 0.1%.

In economic news, durable goods orders were weaker than expected, as was the Market US Services PMI and the consumer confidence index. 

The S&P/Case-Schiller home price report was in-line with expectations.

In addition to the mostly disappointing economic numbers, sentiment was hurt by the sharp drop in crude oil prices.

Traders are eagerly awaiting the Fed's rate decision announcement tomorrow. According to Bloomberg, makers are pricing in a 4% probability of a rate hike tomorrow.

However, traders will be on guard for any indication on whether the Fed will move in December.

Health Care Rocks 

Earnings season continued on this morning, with big pharma companies taking center stage today.

Industry giants Pfizer (PFE), Merck (MRK), and Bristol-Myers (BMY) all reported earnings and revenues that exceeded analysts expectations, which resulted in significant outperformance for the health care sector.

The Select Health Care ETF (XLV) rose 1.8% today, making it one of the best performing ETFs for the day.

And in turn, biotechnology stocks also displayed impressive relative strength, with the NASDAQ Biotechnology Index ETF (IBB) rising 3.2%.

Time for Tech Giants

(AAPL), which is the largest component in the S&P 500 and NASDAQ, reported earnings after the bell.

Traders had been somewhat cautious towards Apple in recent days due to weakness in key supplier Dialog Semiconductor.

Apple beat analysts sales and revenue expectations, but reported iPhone and iPad unit sales numbers that were slightly below Wall Street estimates.

Nonetheless, shares rose modestly in extended trading.

Twitter (TWTR)  shares sold off aggressively in extended trading after reporting Q3 earnings. The company reported strong revenues and earnings, as was expected after it reaffirmed guidance.

However, Twitter reported weak user growth and below-consensus fourth-quarter guidance, which took investors by surprise given the recent guidance announcement.

Last week, Twitter took a major hit on a Morgan Stanley downgrade, and the stock had been generally maligned by Wall Street analysts. 

So the negativity appears warranted.

Wednesday's Financial Outlook

Aside from the highly-anticipated FOMC rate decision at 2:00 p.m. ET, the economic calendar is fairly light tomorrow. MBA Mortgage Applications and the Trade Balance will both be reported before the open.

In earnings, Anthem (ANTM), Arrow Electric ARW), Automatic Data (ADP), Fiat Crysler, General Dynamics (GD), International Paper (IP), and Walgreen's (WBA) report before the open.

Barrick Gold (ABX), Con-Way (CNW), Lincoln National (LNC), Marriott (MAR), O'Reilly Auto (ORLY), Pilgrim's Pride (PPC), Suncor Energy (SU), and Tesoro (TSO) report after the closing bell.

No positions in stocks mentioned.
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