Stock indexes on Thursday lost steam in the final minutes of trade but finished near records, booking slight gains as investors drew optimism from a Brexit draft agreement and upbeat third-quarter results from U.S. companies such as Netflix and Morgan Stanley.
How did major indexes perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.09% rose 23.90 points, or 0.1%, to 27,025.88, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.18% advanced 8.26 points, or 0.3%, to 2,997.95. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.20% gained 32.67 points, or 0.4%, to 8,156.85.
Thursday’s trade put the Dow about 1.2% from its July 15 closing record at 27,359.16, the S&P 500 finished about 0.9% from its July 26 closing record at 3,025.86, while the Nasdaq ended the session 2.1% from its all-time closing high at 8,330.21 hit July 26.
What drove the market?
U.S. stocks reacted positively overall to the start of third-quarter earnings reports and news that Britain was closing in on ending a nearly four-year-old divorce saga with the EU.
“Even though it is very early in the Q3 earnings reporting period, investors have been encouraged by the better-than-expected results for the large diversified banks and selected health-care companies,” said Sam Stovall, chief investment strategist at CFRA, in a note.
Overall, the U.S. corporate earnings season is off to a good start. More than 78% of the S&P 500 index companies that have reported so far have topped analyst earnings expectations, according to FactSet.
Headlines pointing to a tentative Brexit deal helped to set the stage for U.S. equity indexes and sent the British pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.0461% higher, while also lifting European stocks.
However analysts cautioned that the agreement could still be derailed. Northern Ireland’s Democratic Unionist Party, a key ally of U.K. Prime Minister Boris Johnson’s Conservative Party, said it remained opposed to the draft agreement.
“It remains to be seen whether the reaction is short-lived as the politicians go toe-to-toe again at the weekend, but in the meantime the very possibility of an agreed outcome to the painful Brexit saga has resulted in a relief rally, both financial and psychological,” said Richard Hunter, head of markets at Interactive Investor.
Investors also digested a series of downbeat U.S. economic reports though. The number of unemployed workers who applied for jobless benefits in the second week of October rose slightly, but layoffs nationwide remained near a 50-year low and showed no sign of rising despite a slowdown in the U.S. economy.
U.S. new-home construction fell 9% in September from the month before, while permits for new housing construction were issued at a rate of 1.39 million homes, a 3% decline and below the 1.38 million consensus expectations.