Major US stocks rose moderately as strong quarterly results from companies such as Netflix (NFLX) and Morgan Stanley (MS) encouraged investors. The mood was also supported by reports that the UK and the EU reached a preliminary agreement.

Netflix (NFLX) reported quarterly earnings of $ 1.09 per share, compared with an average analyst estimate of $ 1.05 per share. Revenues generally coincided with the market forecast. The company also reported that during the quarter the number of its subscribers increased by 6.77 million (+ 12% yoy), but warned that increased competition could have a negative impact on the growth rate of the number of subscribers in the last quarter of this year. NFLX shares jumped nearly 3%.

Morgan Stanley (MS) reported third-quarter earnings of $ 1.27 per share, $ 0.15 higher than the market average. The company's revenue also exceeded analysts' forecasts. MS CEO James Gorman said the quarter was strong despite the traditional decline in summer activity and volatile markets. MS shares about 2%.

However, IBM (IBM) reporting was a disappointment for the market. The company showed adjusted earnings of $ 2.68 per share, which was $ 0.02 higher than analysts. Nevertheless, the company's revenue was below the average forecast of analysts and showed a year-on-year decline for the fifth quarter in a row. IBM shares fell 5.4%.

Market participants also drew attention to several important macroeconomic reports. A Department of Commerce report showed US housing construction fell from more than a 12-year high in September, but single-family home construction rose for the fourth consecutive month. This suggests that the housing market is still supported by lower mortgage rates even in the face of a slowing economy. According to the report, US housing construction fell 9.4% to a seasonally adjusted annual rate of 1.256 million units last month, as construction in the unstable segment of multi-apartment buildings declined. At the same time, building permits fell 2.7% to 1.387 million in September.

Meanwhile, the US Department of Labor said that the number of applications for state unemployment benefits increased by only 4,000 to 214,000, seasonally adjusted for the week ending October 12. This suggests that the labor market continues to decline, despite the slowdown in employment and economic growth. Data for the previous week were unchanged. Economists predicted an increase in the number of applications by 215,000 over the past week.

Most DOW components completed trading in positive territory (20 out of 30). The biggest gainers were UnitedHealth Group Incorporated (UNH; + 2.84%). Outsiders were IBM shares (IBM; -5.39%).

All S&P sectors recorded an increase. The health sector grew the most (+ 1.0%)

At the time of closing:

Dow 27,026.16 +24.18 +0.09%

S&P 500 2,997.95 +8.26 +0.28%

Nasdaq 100 8,156.85 +32.67 +0.40%

U.S. stock-index futures rose on Thursday, as reports that Britain struck a preliminary deal with the EU helped to remove some investor uncertainty amid heightened concerns about the health of the global economy, while solid earnings from Netflix (NFLX) and Morgan Stanley (MS) affirmed a strong start to Q3 reporting season. 

Global Stocks:

The Commerce Department reported on Thursday the building permits issued for privately owned housing units dropped by 2.7percent m-o-m in September to a seasonally adjusted annual pace of 1.387 million, while housing starts fell by 9.4 percent m-o-m to an annual rate of 1.256 million.

Economists had forecast housing starts dropping to a pace of 1.320 million units last month and building permits falling to a pace of 1.350 million units.

Data for August was revised to show homebuilding growing to a pace of 1.386 million units, instead of decreasing at a rate of 1.364 million units as previously reported.

According to the report, permits for single-family homes, the largest segment of the market, increased 0.8 percent m-o-m at 882,000 in September (the highest level since February 2018), while approvals for the multi-family homes segment declined 8.2 percent m-o-m to a 505,000 unit-rate.

In the meantime, groundbreaking on single-family homes rose 0.3 percent m-o-m to a rate of 918,000 units in September (the highest level since January), while housing starts for the multi-family tumbled 28.2 percent m-o-m to a 338,000 -unit pace.

(company / ticker / price / change ($/%) / volume)

Pfizer (PFE) resumed with a Neutral at BofA/Merrill; target $37

Merck (MRK) resumed with a Neutral at BofA/Merrill; target $90

Travelers (TRV) initiated with an Underperform at Evercore ISI; target $128

Morgan Stanley (MS) reported Q3 FY 2019 earnings of $1.27 per share (versus $1.17 in Q3 FY 2018), beating analysts’ consensus estimate of $1.12.

The company’s quarterly revenues amounted to $10.032 bln (+1.6% y/y), beating analysts’ consensus estimate of $9.627 bln.

MS rose to $44.69 (+4.44%) in pre-market trading.

Honeywell (HON) reported Q3 FY 2019 earnings of $2.08 per share (versus $1.90 in Q3 FY 2018), beating analysts’ consensus estimate of $2.01.

The company’s quarterly revenues amounted to $9.086 bln (-15.6% y/y), generally in line with analysts’ consensus estimate of $9.122 bln.

The company also raised guidance for FY 2019, projecting EPS of $7.90-8.15 (compared to its prior guidance of $7.80-8.10 and analysts’ consensus estimate of $7.99) and revenues of $36.5-37.2 bln (compared to its prior guidance of $36-36.9 bln and analysts’ consensus estimate of $36.85 bln).

HON rose to $164.00 (+0.23%) in pre-market trading.

Netflix (NFLX) reported Q3 FY 2019 earnings of $1.09 per share (versus $0.89 in Q3 FY 2018), beating analysts’ consensus estimate of $1.05.

The company’s quarterly revenues amounted to $5.245 bln (+31.2% y/y), generally in line with analysts’ consensus estimate of $5.248 bln.

The company also issued downside guidance for Q4 FY 2019, projecting EPS of $0.51 versus analysts’ consensus estimate of $0.85 and revenues of $5.442 bln versus analysts’ consensus estimate of $5.51 bln.

NFLX rose to $309.40 (+8.08%) in pre-market trading.

IBM (IBM) reported Q3 FY 2019 earnings of $2.68 per share (versus $3.42 in Q3 FY 2018), beating analysts’ consensus estimate of $2.66.

The company’s quarterly revenues amounted to $18.028 bln (-3.9% y/y), missing analysts’ consensus estimate of $18.286 bln.

The company also reaffirmed FY 2019 EPS guidance of $12.80 versus analysts’ consensus estimate of $12.81.

IBM fell to $135.16 (-4.89%) in pre-market trading.