Stocks Close Lower as Momentum Stocks Tumble
US stocks started the trading session on a positive note as better than expected earnings results from Home Depot help the major averages move into the black. JPM is poised to settle with the government on a number of issues that will be encapsulated into one fine of nearly 13 billion dollars. The settlement could lift the cloud that is hanging over the stock and the entire financial sector.
Home Depot (NYSE:HD) reported earnings before the bell on Tuesday that beat consensus estimates. Home Depot’s third quarter earnings per share of $0.95 beat estimates by $0.06 and net profit increased to $1.4 billion from $947 million, while revenue climbed 7.4% and topped estimates by $330 million. Comparable store sales also grew 7.4%.
There was little economic news on Tuesday, as investors look forward to inflation data and retail sales scheduled for Wednesday and Thursday. Although inflation has been relatively tepid recently, retail sales are expected to growth by nearly 0.5% for October.
Car sales in the US have been booming and recent data from Europe shows that auto sales are gaining traction. European car sales rose for a second month in a row in October, climbing 4.6% year over year to 1.04 million registrations after a 5.5% gain in September. However, registrations fell 3.1% in January-October, strengthening the likelihood that sales in the region will fall for a sixth consecutive year in 2013.
Momentum stocks in the Nasdaq 100 continued to trade under pressure driving down the technology heavy index for the second straight trading session. Support on the index is seen near the 50-day moving average near 3291. Resistance is seen near the recent highs at 3430.
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