The Nasdaq marched past the rest of Wall Street on Tuesday, Oct. 31, as a two-day rally in tech extended into a third session.
The Dow Jones Industrial Average was up 0.06%, the S&P 500 added 0.14%, and the Nasdaq increased 0.4%. The tech-heavy Nasdaq was on track to close the month out with a new record, beating the previous all-time high set on Friday, Oct. 27.
Benchmark indexes were also on track to close out October with solid gains. At these levels, the Dow will end 4% higher, the S&P 500 2%, and the Nasdaq 3.5%. This would be the Dow and S&P 500's seventh month of gains in a row and their best monthly increase since February. The Nasdaq was set to end with gains for its fourth month in a row after a tech selloff in June tainted its winning streak.
A tech rally that stretched over Friday and Monday, Oct. 30, kept momentum going into Tuesday's session. Chipmaker stocks such as Intel Corp. (INTC) , Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) , Nvidia Corp. (NVDA) , Broadcom Ltd. (AVGO) and Micron Technology Inc. (MU) were all higher even as industry peer Qualcomm Inc. (QCOM) sank. The S&P Semiconductor SPDR ETF (XSD) increased 1%.
Qualcomm shares were sharply lower, down 8%, on Tuesday amid reports that Apple Inc. (AAPL) may dump the chip supplier from its iPhone and iPad line up next year. Multiple media reports, first published by the Wall Street Journal late Monday, suggest Apple is already designing its key tech gadgets without Qualcomm chips as the two groups continue to spar over royalty payments. Bloomberg reported that Apple may favor Intel Inc. (INTL) or MediaTek Inc (MDTKF) components as a replacement.
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Better-than-expected earnings from Kellogg Co. (K) and Mondelez International Inc. (MDLZ) drove gains in the consumer staples sector. Other gainers included Kraft Heinz Co. (KHC) , Campbell Soup Co. (CPB) and General Mills Inc. (GIS) . The Consumer Staples Select Sector SPDR ETF (XLP) increased 0.8%.
Kellogg topped third-quarter earnings and revenue estimates. Profit rose to 85 cents a share from 82 cents a year earlier. Adjusted earnings of $1.05 a share beat consensus by 11 cents. Revenue of $3.27 billion exceeded expectations of $3.21. CEO Steve Cahillane said in a statement that "strong productivity programs give us good visibility into cost savings."
Mondelez gained almost 6% after exceeding third-quarter estimates on growth in its Latin America business. The parent of brands such as Oreo and Triscuit reported a 2% increase in sales and organic revenue growth of 2.8%. Earnings of 57 cents a share beat by 3 cents.
Dow component Pfizer Inc. (PFE) slipped despite beating third-quarter profit estimates. Earnings more than doubled to 47 cents a share from 22 cents a year earlier. Adjusted earnings of 67 cents a share beat estimates by 2 cents. Revenue of $13.17 billion was in line with estimates of $13.18 billion. For the full year, Pfizer expects revenue of $52.4 billion to $53.1 billion, up from $52 billion to $54 billion, and earnings of $2.58 to $2.62 a share, higher than previous estimates of $2.54 to $2.60.
In other earnings news, Aetna Inc. (AET) beat earnings over its recent quarter. Profit rose to $2.52 a share from $1.70 a share, while adjusted earnings of $2.45 a share beat consensus of $2.08. Revenue of $14.99 billion came in below estimates of $15.11 billion. For the full year, Aetna anticipates earnings of $5.95 a share, higher than previous targets of $5.46 to $5.56. The healthcare company anticipates adjusted profit of $9.75 a share, higher than a previous estimate of $9.45 to $9.55.
Under Armour Inc. (UA) tanked 17% after a drop in quarterly profit and sales. Earnings declined by 58% to $54.2 million and fell short of an analyst target of $84 million. Sales dropped 4.5% to $1.41 billion, falling short of $1.48 billion consensus. CEO Kevin Plank said the company is "working aggressively" to execute its strategy "against this difficult backdrop."
Just over 60% of S&P 500 companies have reported earnings so far this reporting season. Of those, 73% have exceeded profit estimates, and 66% have beat revenue forecasts. Economists anticipate blended earnings growth of 7%, or 4.6% excluding energy, according to Thomson Reuters.
"The first half of the season has been good relative to expectations," LPL Financial's John Lynch and Ryan Detrick wrote in a note. "Strong upside and big increases in technology and energy earnings have offset financials weakness and driven the upside relative to expectations... We expect solid results may continue in November based on the strong macroeconomic backdrop, resilient estimates, and a weaker U.S. dollar."
Rockwell Automation (ROK) surged more than 8% on reports the company has received, and rejected, several offers from Emerson Electric Co. (EMR) . The latest offer of $215 a share was made in October and valued the company at more than $27 billion, according to CNBC. Emerson reportedly offered $200 a share in August.
The Federal Reserve will meet Tuesday and Wednesday, Nov. 1. It will come as a big surprise to markets if the central bank makes any changes to interest rates, though investors will be looking out for any tweaks to language that might indicate a move higher in December.
The chances of a interest rate hike at this meeting sit at just 2%, according to CME Group fed funds futures, but chances spike to 96% at the December meeting. An announcement on rates will be made on Wednesday afternoon.
In economic news, employment costs in the U.S. rose by 0.7% over the third quarter, according to the employment cost index. Wages grew 0.7%, while benefits increased 0.8%. The U.S. jobs report for October will be released on Friday, Nov. 3. Economists anticipate a strong rebound after a loss of jobs in September.
Manufacturing activity in the Chicago area rose in October to its highest reading since March 2011. Chicago PMI increased to a reading of 66.2 this month, according to the Institute of Supply Management. The measure rose from 65.2 in September. Order backlogs reached their highest since February, 1974.
Consumer confidence rose to its best level in more than 16 years in October. The measure increased to a reading of 125.9 in October, its best since December 2000 and far better than expectations of 121. Consumers have grown more optimistic over the short-term outlook, particularly business conditions. However, expectations for job growth in the coming months declined.
Updated from 12:56 p.m. ET, Oct. 31.
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