Market Update: U.S. Stocks End Turbulent Month on a High Despite Lukewarm Earnings Call from Facebook

U.S. stocks extended their relief rally on Wednesday, closing out a brutal month on a high following a string of mostly positive earnings calls from major companies. Shares of Facebook Inc. (FB) surged after the social media juggernaut offered rare insight into its strategy moving forward.

Stocks Extend Relief Rally

All of Wall Street’s major indexes headed for gains, helping to offset brutal declines earlier in the month that dragged share prices into correction territory. The Dow Jones Industrial Average collected 241.12 points, or 1%, to close at 25,115.76. Shares of Visa Inc. (V) led the rally after posting sharp declines during the previous session. Goldman Sachs Group Inc. (GS), Caterpillar Inc. (CAT) and Microsoft Corp (MSFT) also outperformed the market.

The much broader S&P 500 Index closed up 1.1% at 2,711.74, with eight of 11 primary sectors contributing positively. Communication services and information technology topped the leader board, growing at least 2.2%. Financials and consumer discretionary shares also put up huge gains.

The technology-heavy Nasdaq Composite Index was the day’s best performer, gaining 2% to 7,305.90.

Facebook: Conflicting Signals

Facebook’s stock price surged following a lukewarm earnings call after the bell on Tuesday. The social media company reported growing revenue and per-share earnings but failed to hit analysts’ expectations amid slowing user numbers.

Investors looked past the disappointing figures after CEO Mark Zuckerberg opened up about the company’s growth strategy moving forward. During the earnings call, Zuckerberg cautioned investors that 2019 will be an investment year for the firm as it continues to buckle down on security breaches and fake news. However, not everyone is convinced Facebook will be able to turn things around in the face of declining interest among teenage users and Europe as a whole.

Elsewhere on the earnings docket, General Motors Company (GM) blew past expectations on revenue and per-share earnings thanks to strong truck sales and higher prices. Estee Lauder (EL), a cosmetics and fragrance company, easily topped Wall Street’s projections on both top- and bottom-line results.

Labor Market Continues to Hum

U.S. private sector employers resumed their torrid pace of hiring this month, adding credence to the view that the economy was on solid footing. The private sector created 227,000 jobs in October, easily outpacing forecasts of 189,000, payrolls processor ADP reported Wednesday. The September hiring rate was revised down to 217,000 from 230,000.

“The job market bounced back strongly last month despite being hit by back-to-back hurricanes,” said Mark Zandi, chief economist at Moody’s Analytics. “Testimonial to the robust employment picture is the broad-based gains in jobs across industries. The only blemish is the struggles small businesses are having filling open job positions.”

The ADP report bodes well for the official hiring numbers due on Friday. Economists at the Labor Department are expected to show the creation of 190,000 nonfarm jobs during October. Perhaps more importantly, analysts expect average hourly earnings to surge 3.1% annually, which would mark one of the fastest growth rates since the financial crisis.

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Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi