Stocks End Lower, All Eyes On This Morning's PCE Inflation Report  Image: Bigstock Stocks closed lower again yesterday with the big three indexes all finishing in the red. The day started like all the others this week -- with a slew of earnings. Lots of positive EPS surprises as well from the likes of Mastercard, Merck, UPS, Bristol Myers Squibb, and Northrop Grumman to name and handful. But in spite of some impressive beats. Most ended lower on the day. After the close we heard from mega-cap Amazon and they posted a positive EPS surprise of 46.5%, and a positive sales surprise of 1.10%. That translated to a quarterly EPS growth rate of 325% vs. this time last year, and a sales growth rate of 12.6%. They were down in the regular session by -1.50% before they reported, but were trading higher by roughly 5% in after-hours.
Intel, another marquee name, posted a positive EPS surprise of 95.2%, and a positive sales surprise 4.91%. That equated to a quarterly EPS growth rate of -30.5% vs. this time last year, and a negative sales growth rate of -7.69%. They were down by -0.94% in the regular session before earnings, but jumped more than 8% in after-hours trade. In other news, yesterday's advance estimate for Q3 GDP came in hotter than expected at 4.9% vs. views for 4.2%. For context, Q2 came in at 2.1%. So there was a sharp acceleration in economic activity in Q3.
Weekly Jobless Claims rose by 10,000 to 210,000 vs. views for 208,000. The 4-week moving average, however, came in at 207.5K. The Kansas City Manufacturing Index came in at -8, the same as last month. But the Durable Goods Orders report showed New Orders up 4.7% m/m vs. last month's 0.2% and estimates for -0.1%. Ex-transportation it was up 0.5% vs. the consensus for 0.2%. Core Capital Goods rose 0.6% vs. views for 0.0%. And the Pending Home Sales Index increased 1.1% m/m vs. last month's -7.1%, and estimates for -1.0%. The Index came in at 72.6 vs. last month's This morning comes the report everyone has been waiting for, and that's the Personal Consumption Expenditures (PCE) index. This is the Fed's preferred inflation gauge. The estimates are calling for the headline number to be up 0.3% m/m, and 3.4% y/y vs. last month's 3.5%. The core rate (ex-food and energy) is expected to be up 0.3% m/m, and 3.7% y/y vs. last month's 3.9%. All eyes will be on today's report as this will be the last inflation data the Fed gets before next week's FOMC announcement on Wednesday, November 1. We'll also get more earnings with 122 companies on deck to report including Exxon Mobile, AbbVie, and Colgate-Palmolive to name a few. Stocks are on pace for another down week. But a friendly PCE report that shows inflation continuing on the decline could help buoy the market and eat into the weekly losses. The PCE report comes out at 8:30 AM ET. Best,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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