Financial Earnings Shine, Airline Earnings Disappoint

The stock market struggled on Tuesday as the start of the 3Q earnings season officially got underway with the Financial sector pleasing Wall Street analysts while the Airline sector widely disappointed. However, despite solid beats by the banking companies, shares of Citigroup (C) and JPMorgan Chase & Co. (NYSE: JPM) closed lower for the session with the former falling nearly 5%.

The coronavirus treatment optimism also weighed on sentiment following news from Johnson & Johnson (JNJ) and Eli Lilly (LLY) regarding pauses of their studies of vaccines and antibody therapeutics. Apple (AAPL) shares weighed on Tech despite the announcement of its new iPhone 12 models.

The Nasdaq tested an intraday low of 11,821 before ending at 11,863 (-0.1%). Fresh and upper support at 11,800-11,700 was challenged but held. A close below the latter would indicate additional back-test potential towards 11,600-11,500.

The S&P 500 settled at 3,511 (-0.6%) following the afternoon drop to 3,500. Near-term and upper support at 3,500-3,475 was tapped but held. A close below the latter would signal a further fade towards 3,450-3,425.

The Dow tapped a late day low of 28,604 while closing at 28,679 (-0.6%). Current and upper support at 28,750-28,500 failed to hold. A move below the latter would suggest a retest towards 28,250-28,000.

The Russell 2000 closed at 1,636 (-0.7%) after testing a morning low of 1,631. New and upper support at 1,635-1,620 was breached but held. A drop below the latter would indicate further weakness towards 1,615-1,600.

The losses snapped 4-session winning streak’s for the major indexes with near-term support levels easily holding. However, volatility is back on the rise after failing to close below 25 last Friday and Monday. While this level was stretched on both days, it was a good indication the retest towards all-time highs for the stock market wasn’t going to be smooth sailing.

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Exxon Mobil (XOM) upgraded to Neutral from Sell at Goldman Sachs
Foot Locker (FL) double upgraded to Buy from Underperform at BofA
Unilever (UN) upgraded to Outperform from Neutral at Exane BNP Paribas

Activision Blizzard (ATVI) downgraded to Market Perform from Outperform at BMO Capital
American Airlines (AAL) downgraded to Negative from Neutral at Susquehanna
Illumina (ILMN) downgraded to Neutral from Buy at Guggenheim

Before the open: ASML Holding (ASML), Bank of America (BAC), Goldman Sachs (GS), Infosys Technologies (INFY), PNC Bank (PNC), Progressive (PGR), U.S. Bancorp (USB), UnitedHealth Group (UNH), Wells Fargo & Co. (WFC)

After the close: Alcoa (AA), Heritage-Crystal Clean (HCCI), Sleep Number (SNBR), United Airlines (UAL)

MBA Mortgage Applications - 7:00am
Producer Price Index - 8:30am
Beige Book - 2:00pm

Gold closed at $1,894.60 an ounce,  down $34.30
Silver settled at $24.13 an ounce,  down $1.14
Copper finished at $3.04 a pound, down $0.02
Crude Oil was at $40.13 a barrel, 
up $0.48
Bitcoin Investment Trust (GBTC) ended at $12.38 down $0.28

I hope this helps you prepare for the trading day. Make it a great one!

   Todd Mitchell

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