By Sara Sjolin and Anora M. Gaudiano, MarketWatch
Seagate Technology surges after profits
U.S. stock-market indexes took a pause from a string of record
highs on Monday as the S&P 500 and Nasdaq Composite traded
slightly lower, with traders weighing the prospects for tax cuts
and a mixed bag of earnings results.
What are stock indexes doing?
The major U.S. stock indexes scored all-time closing highs on
Friday, marking the 24th time in 2017 that all three main
benchmarks simultaneously closed at records
(http://www.marketwatch.com/story/dow-sp-shape-up-for-more-records-after-senate-clears-big-hurdle-to-tax-reform-2017-10-20).
The S&P 500 index was off by 2 points, or 0.1%, to 2,573,
after setting an intraday all-time high in early trade. The Nasdaq
Composite Index slipped 20 points, or 0.3%, to 6,608.
The Dow Jones Industrial Average clung to modest gains, up 17
points, or 0.1%, to 23,345, helped by gains in Home Depot Inc.
(HD), Nike Inc. (NKE) and Johnson & Johnson (JNJ), all up more
than 1%.
What's driving the market?
Tepid trading comes amid lack of news surrounding the prospects
for tax cuts. Expectations for a major tax overhaul have been
credited with helping spur a rally in U.S. stocks in the wake of
Trump's presidential election win in November.
Read:What's next for a tax overhaul after the Senate passed its
budget
(http://www.marketwatch.com/story/whats-next-for-a-tax-overhaul-after-the-senate-passed-its-budget-2017-10-20)
Better-than-expected earnings results, which have been driving
markets over the past few weeks, appeared to have taken a back seat
on Monday.
See:Tech earnings--the iPhone X, other new gadgets that will
matter this holiday season
(http://www.marketwatch.com/story/tech-earnings-the-new-gadgets-that-will-matter-this-holiday-season-2017-10-20)
Earnings from U.S. companies have largely been better than
forecasts. About 75% of the S&P 500 companies that have
reported so far have beat earnings expectations, according to
FactSet data.
What are strategists saying?.
-- "It feels like the market is resting after making all-time
highs across the board. People are still focused on earnings and
are definitely banking on tax cuts," said Ian Winer, head of the
equities division at Wedbush Securities. "But with each day we keep
seeing that things that are proposed to offset the cuts are killed
and today it was 401(k) plans," Winer added.
Last week The Wall Street Journal reported that there are
proposals about capping the amount that Americans may contribute
before taxes to 401(k) plans as a way to generate revenue. However,
President Trump tweeted this morning, saying that there will be no
changes to 401(k) rules, which he called "a great and popular
middle class tax break that works."
-- "Investors are likely [to] continue ignoring overstretched
valuations, and keep driving equities higher for the remainder of
the year, if they believe fiscal reforms will be implemented soon,"
said Hussein Sayed, chief market strategist at FXTM, in a note.
See:Stocks are incredibly overbought--why that's not as scary as
it sounds
(http://www.marketwatch.com/story/stocks-are-incredibly-overbought-why-thats-not-nearly-as-scary-as-it-sounds-2017-10-23)
What are other assets doing?
The Japanese yen fell and the Nikkei 225 index rallied after
Prime Minister Shinzo Abe's coalition easily won a majority in
Japan's snap parliamentary election
(http://www.marketwatch.com/story/japans-abe-wins-by-a-landslide-now-aims-to-change-constitution-2017-10-23)
on Sunday. Abe's win raises the prospect for continued
accommodative monetary policy, which tends to weaken the yen and
boost stocks in the country.
Read:Japan's Nikkei rises for a 15th straight session after
Abe's election win
(http://www.marketwatch.com/story/japans-nikkei-rises-for-a-15th-straight-session-after-abes-election-win-2017-10-23)
Other Asian markets closed mixed, while European stocks mostly
were higher.
The dollar rose, continuing higher on the prospect of tax cuts.
The ICE Dollar Index was up 0.3% at 93.961. Metals were largely
lower, pressured by the stronger greenback.
Oil prices
(http://www.marketwatch.com/story/oil-prices-seesaw-as-traders-focus-on-iraq-disruptions-us-shale-2017-10-23)
climbed after the Organization of the Petroleum Exporting Countries
said over the weekend that production cuts exceeded agreed levels
by 20%. The cartel also said "all options are left" for rebalancing
the market, seen as reinforcing the view that the output pact will
be extended when OPEC meets in November.
Which stocks are in focus?
Shares of VF Corp.(VFC)jumped 5.8% after raising its guidance
(http://www.marketwatch.com/story/shares-of-wrangler-parent-vf-corp-rise-after-earnings-beat-and-raised-outlook-2017-10-23).
Shares of disk-drive maker Seagate Technlogy PLC(STX) surged 13%
after the company handily beat earnings estimates for its fiscal
first quarter.
Halliburton Co.(HAL) shares fell 1.5% even as earnings beat
forecasts
(http://www.marketwatch.com/story/halliburton-earnings-revenue-beat-estimates-2017-10-23).
Deltic Timber Corp.(DEL) rallied 6.5% after the timberland
holding company agreed to merge
(http://www.marketwatch.com/story/deltics-stock-set-to-surge-after-merger-deal-with-potlatch-2017-10-23)
with Potlatch Corp. (PCH), creating a company with a total
enterprise value of $4 billion.
Hasbro Inc. (HAS) plunged 9.2% after providing a downbeat sales
outlook
(http://www.marketwatch.com/story/hasbro-beats-profit-and-revenue-expectations-but-gives-downbeat-sales-growth-outlook-2017-10-23).
Rival Mattel, Inc.(MAT), which is scheduled to report result on
Thursday, also fell, trading 3.1% lower.
Cisco Systems Inc. shares (CSCO) shares were 1% higher after a
Bloomberg News report that the company is nearing a deal to buy
(http://www.marketwatch.com/story/cisco-reportedly-close-to-acquiring-broadsoft-2017-10-22)
telecommunications-focused software company BroadSoft
Inc.(BSFT).
What data are traders watching?
The Chicago Fed national activity index for September improved
to 0.17 in September from negative 0.37 in August.
(END) Dow Jones Newswires
October 23, 2017 12:49 ET (16:49 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.