Stocks jumped into early gains Wednesday as earnings news and market action in Europe were positive, and a report showed a U.S. hiring spike in September.
General Motors (GM) bolted higher after Japan’s Honda Motor (HMC) announced it would invest $2.75 billion in GM’s self-driving auto unit. Lennar (LEN) shares slumped, despite reporting accelerating revenue growth and home deliveries. Tilray (TLRY) surged and India Globalization Capital (IGC) tanked as marijuana industry stocks turned sharply mixed.
The Dow Jones industrial average and the Nasdaq Composite each opened to gains of 0.5%. Intel (INTC) paced the Dow stocks for a second day. Nike (NKE) was among the index laggards, down 0.3% after an analyst downgrade.
Wynn Resorts (WYNN) and Intel staked out an early lead among Nasdasq 100 stocks.
The S&P 500 gained 0.4%, with General Motors and Intel at the top of the list. Acuity Brands (AYI) posted the S&P 500’s deepest decline, as rising costs squelched an otherwise positive fiscal Q4 report.
Employment surged in September, according to the monthly National Employment Report from ADP. U.S. nonfarm employers added 230,000 workers for the month, a jump of more than 40% from August and far above consensus targets for 179,000 new hires. Midsize services business did the bulk of the hiring.
Services sector growth eased to an eight-month low in September, according to researcher Markit. Its IHS Markit Services PMI slipped to 53.5 for the month, down from 54.8 in August but above expectations for a slip to 52.9. Optimism for the year ahead also turned lower, dropping to its lowest level since 2017, the report said.
The Institute for Supply Management reports its non-monufacturing PMI at 10 a.m. ET. Tomas Barkin, the new head of the Richmond Federal Reserve, spoke at 8 a.m. ET, kicking off the day’s list of speeches by Fed officials. Also scheduled is a media discussion with Fed chief Jerome Powell in Washington, D.C., at 4 p.m. ET.
Dow stock Intel popped 2.4% early, following strong advances on Friday and Tuesday. An analyst report on Tuesday said the company could potentially ramp up production of its 10-nanometer processor chips ahead of its original June 2019 deadline. Intel shares are up 9% since Sept. 12, in the early stages of building a right side to a four-month consolidation. Intel rival Advanced Micro Devices (AMD) dived 7.5% in early trade.
Lennar shed its early loss and rose 1%. The homebuilder reported a 52% earnings gain atop a 74% rise in its third-quarter revenue. Deliveries soared 66% during the quarter, and average sales prices hit $415,000 — up 10% and also above analyst forecasts. Lennar shares are correcting, down 35% from a January high. D.R. Horton (DHI) rose 1.2%.
General Motors opened 5% higher, then trimemd that gain to 3%. Honda and GM announced plans to partner on developing self-driving vehicle technologies. Honda will invest $750 million immediately in GM Cruise LLC, adding another $2 billion over the next 12 years. The deal gives Honda a 5.7% stake in the unit. Japan’s SoftBank (SFBTY) took a 19.6% stake in the GM unit in June, spending $2.2 billion. GM plans to launch a robot-taxi service sometime in2019, the location has not yet been disclosed.
GM shares are down 27% from a mid-June high.
Aluminum giant Alcoa (AA) surged 7.8%. Investors are watching steel and aluminum markets following the Trump administration’s success in rebranding the Nafta trade agreement. The new accord sets the stage for negotiations regarding steel and aluminum, commodities on which the administration placed tariffs in January. Talks were reportedly set to begin this week. Alcoa shares have been in a steep decent since April.
Cannabis stocks continued their volatile action. Tilray jumped 6%, Cronos Group (CRON) fell 3%, Canopy Growth (CGC) gained 2%. India Globalization Capital dived 33%. New Age Beverages (NBEV) fell 8.4%. David’s Tea (DTEA) collapsed 29%.
PepsiCo (PEP) announced it had no immediate plans to produce a cannabis-based drink.
Markets in Europe advanced on news that Italy was planning to narrow its budget deficit after 2019 to remain in compliance with eurozone regulations. London’s FTSE 100 and Paris’ CAC-40 each jumped 0.6% in afternoon trade. The Frankfurt Stock Exchange was closed on holiday.
Hong Kong’s Hang Seng index shed 0.1%, as resistance at its 200-day moving average continues to thwart a rebound. China’s mainland markets remain closed for the Golden Week holiday.
In Japan, Tokyo’s Nikkei 225 carved 0.7% lower as traders took profits following a four-week run-up that has left the index at 27-year highs.
The Bombay Stock Exchange’s Sensex dropped 1.5% Wednesday. India’s stock market has been flashing warning signs as the country’s massive shadow lending sector is suddenly on the verge of collapse, threatening the financial system.
India’s government took over the country’s largest lender on Monday, aiming to avoid what is being called its “Lehman moment.” India’s Sensex had gained more than 14% for the year through August. The benchmark ended Wednesday’s session 7.7% below that high.
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