The Dow Jones Industrial Average (INDEX: ^DJI) spent most of the day hemming and hawing over mixed economic news to finish the day with a slight gain of 0.1%.
Promising data came out this morning from both payroll processor ADP and the Institute for Supply Management. ADP reported that the private sector added 162,000 jobs in September, well ahead of estimates of 133,000, and the ISM services index hit its highest mark since March at 55.1, also topping expectations. While the ADP report bodes well for the Department of Labor's all-important employment report on Friday, it's important to remember that the two often differ widely. Economists are still expecting September nonfarm private payrolls to grow by 130,000 when the DOL reports.
Tempering the bullish domestic news was an update from China that its services PMI fell to its lowest level since November 2010, evidence that weakness in its manufacturing sector has spread to the service industry. A similar PMI report in the eurozone indicated a further contraction there as well, and oil prices dipped more than 4% on the negative international data.
Back to the Dow, Hewlett-Packard (NYSE: HPQ) was the big stinker on the day, falling 13% after CEO Meg Whitman gave investors a sobering outlook. Whitman, who took the helm of the ailing tech giant a year ago, said she expects the company's earnings to fall by more than 10% next year, adding, "It is going to take longer to right this ship than any of us would like." The company recently laid off about 30,000 workers as part of its restructuring plan. Whitman said HP may not be able to grow revenue until 2015, and even that seems like wishful thinking right now, as the company has largely missed out on the mobile revolution. The PC-maker seems to have gone from eating Apple and Google's dust to choking on it.
Still, 21 of the 30 Dow components moved higher, with Home Depot (NYSE: HD) , Bank of America (NYSE: BAC) , and Disney (NYSE: DIS) leading the way. All three stand to benefit from an improving economy, and Home Depot has also risen on lower refinancing rates from QE3, climbing 10% in the past month. B of A is perhaps the Dow's most volatile stock and has worked to shed itself of unnecessary operations over the past year so it can focus more on traditional lending. The financial giant also escaped (for now) the wrath of Eric Schneiderman, New York's attorney general, who just filed a lawsuit against JPMorgan Chase over mortgage-backed securities. Schneiderman has promised more litigation, however. Finally, entertainment conglomerate Disney stands to gain as an improving economy should boost attendance at its theme parks and movies.
Keep an eye tonight's presidential debate, which could weigh on markets at tomorrow's open. The economy will be the central topic in this first of three such meetings between the candidates.
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