U.S. stocks wavered Friday, slipping slightly into the red in afternoon trading but still on track for the strongest month in four years.
OCTOBER SURPRISE: After a steep drop in late August and a rocky September, stocks came back in a big way in October. The Standard & Poor’s 500 index has risen for five consecutive weeks and is up 8.6 percent this month, the best month for the index since October 2011. The index is on track for its biggest monthly point gain in its 77-year history, rising about 169 points. The next-best month was March 2000, the height of the dot-com bubble, when it rose 132 points.
October’s gains were fueled by increases in materials, energy and tech companies.
FRIDAY FADE: After venturing into positive territory Friday midday, the Dow Jones industrial average reversed and dipped 60 points, or 0.3 percent, to 17,696 as of 3:30 p.m. The S&P 500 lost seven points, or 0.3 percent, to 2,082. The Nasdaq composite index slid 17 points, or 0.3 percent, to 5,057.
CHINA FEARS WANE: The markets were rocked in August and September as investors worried that the slowing Chinese economy would prevent the U.S. economy from pulling out of a pattern of gradual but uneven growth it has followed since the Great Recession. Paul Christopher, global market strategist for Wells Fargo, said investors are now gaining confidence in the U.S. economy and that China won’t suffer an abrupt downturn.
“We could see investors finally put that correction in August and those fears permanently behind them,” he said.
Christopher said the November and December U.S. unemployment reports will help set the course of the markets for the rest of this year, along with the Federal Reserve’s interest rate policies.
QUIET HOLIDAYS: Sam Stovall, U.S. equity strategist at S&P Capital IQ, said a very strong October usually means the market won’t make big gains in November and December, muting the so-called Santa Claus rally. He expects stocks to keep rising for the rest of this year and make gains in 2016, lifted by overall economic growth and improving corporate earnings.
He said 2016 “has a chance of being a good year but not a great year” for equities. “Investors will continue to buy the dips until the prospect of either a US or global recession spooks investors again.”
TIGHT PURSE STRINGS: Still, U.S. economic data suggest feeble growth. The Commerce Department said Friday that consumer spending inched up just 0.1 percent in September, partly because consumers were spending less on gas as energy prices fell. The gain was the smallest in eight months. However consumers did spend more on services and on large manufactured goods like cars. Consumer spending is closely watched because it accounts for 70 percent of economic activity.
Incomes also grew 0.1 percent, and wages and salaries were flat.
Consumer confidence also improved compared to last month, according to a University of Michigan survey.
ADDING TO THEIR NETWORK: The professional networking service LinkedIn delivered a strong third quarter. LinkedIn’s profit surpassed analyst estimates and revenue was higher than expected. The stock gained $26.34, or 1213 percent, to $243.34.
TAKING OFF: Online travel company Expedia rose $9.52, or 7.5 percent, to $136.58 after it said savings from its acquisition of Orbitz could be greater than it initially expected. Expedia bought Orbitz in September for $1.3 billion.
PARTLY CLOUDY: First Solar, the biggest U.S. solar company, advanced $6.09, or 12 percent, to $57.08 on a bigger-than-expected profit and more revenue. SolarCity, which installs solar panels in homes and businesses, fell after the company posted a bigger-than-expected loss and offered a fourth-quarter outlook that fell short of analyst forecasts. It plunged $8.25, or 21.7 percent, to $29.82.
GENWORTH SKIDS: Insurer Genworth Financial tumbled 60 cents, or 11.6 percent, to $4.62. The company has been selling some assets to improve its performance, but said that for now, its ability to take bigger steps in that direction is “limited.” Genworth also reported a smaller-than-expected quarterly profit.
OIL SLICK: Chevron says it will eliminate around 10 percent of its jobs, or up to 7,000 positions, and will also slash capital and exploratory spending as it deals with lower oil prices that are cutting deeply into profit. The second-largest oil company said Friday that its profit fell 64 percent in the third quarter.
ABBVIE GRABS GAINS: Drugmaker AbbVie surged $5.98, or 11 percent, to $60.08 as sales of its blockbuster anti-inflammatory Humira continued to rise. Humira is the biggest-selling drug in the world and it’s used to treat more than a dozen ailments included rheumatoid arthritis and psoriasis. Revenue for the drug totaled $3.65 billion in the third quarter, accounting for most of AbbVie’s revenue.
UNDER THE WEATHER: CVS Health retreated $4.42, or 4.3 percent, to $99.38 after the drugstore chain and pharmacy benefits manager disclosed a disappointing third-quarter profit and its outlook for 2016 came up short of expectations.
GOING TO THE ATM: Commercial bank KeyCorp said it will buy First Niagara Financial Group for $4.1 billion, and its shares sank 98 cents, or 7.3 percent, to $12.40.
VALEANT KEEPS SLIPPING: Valeant Pharmaceuticals suffered more losses Friday as controversy around its drug prices and sales practices climbed. The stock sank $17.79, or 16 percent, to $93.66.
Late Thursday CVS said it was cutting ties with a specialty pharmacy called Philidor, which is linked to Valeant and has been criticized as a “phantom pharmacy” used to artificially boost Valeant’s sales. The prospect of lost sales to CVS and Express Scripts, which also removed Philidor from its network after the market closed, hit Valeant’s shares late Thursday and again on Friday. Valeant says Philidor has informed it that it will shut down as soon as possible.
BONDS: Bond prices rose. The yield on the 10-year Treasury note fell to 2.15 percent.
ENERGY: Benchmark U.S. crude rose 53 cents, or 1.2 percent, to $46.59 a barrel in New York. Brent crude, which is used to price international oils, advanced 76 cents, or 1.6 percent, to $49.56 a barrel in London. Wholesale gasoline rose 5.5 cents, or 4.1 percent, to $1.405 a gallon. Heating oil picked up 2.5 cents, or 1.7 percent, to $1.499 a gallon. Natural gas rose 6.4 cents, or 2.8 percent, to $2.321 per 1,000 cubic feet.
METALS: Gold fell $5.90, or 0.5 percent, to $1,414.40 an ounce. Silver rose 1.7 cents, or 0.1 percent, to $15.57 an ounce. Copper slipped a fraction of a cent to $2.257 a pound.
CURRENCIES: The dollar lost value against the yen, falling to 120.70 yen from 121.11 on Thursday. The euro rose compared to the dollar, reaching $1.100 from $1.0974.
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