Its “Whip lash” Thursday! Stocks opened higher then took a brief trip south with a 300-point dip before buyers came in and caused a rally sending the Dow to a closing gain of 122 at 26,201. Trading volume was lower. The latest we have heard from IBD and BTS is that markets are under pressure but are not in a correction at this time. All eyes will be on the jobs report due out tomorrow at about the same time everyone saunters into Starbucks for that morning latte.
The non-manufacturing ISM reading came in lower than expected following a trend of recent disappointing economic reports. The gauge dropped to 52.6 down from 56.4. The gurus had expected a reading of 55.5. Trade related pressures might be starting to affect American service industries which account for a bigger chunk of economic activity than regular manufacturers do.
The World Trade Organization or “WTO” handed the US a positive ruling over EU subsidies related to commercial jets made by Airbus. The ruling found the EU had cost the US $7.5 billion and will allow the US to impose tariffs and recapture that loss. The case had been in the works for years and US trade representatives plan to move quickly and impose duties on Airbus jets, wine and cheese on October 18th. While this is a win for US workers it further disrupts global supply chains and could spark retaliation from the EU which is already under pressure from Brexit and Tesla. Delta Air complained that the deal will increase its costs for Airbus jets they have on order.
Tesla reported Q3 car production and delivery numbers yesterday and the results were mixed. The company produced 96,155 vehicles and had record deliveries of approx. 97,000. Elon Musk had hoped to have 100k cars delivered but “missed the mark” by a couple thousand rigs. Wall street was disappointed by the results and pushed shares lower. Tesla did note in the report that it had stopped shipping cars to China in anticipation of being able to deliver cars from its Shanghai Gigafactory by the end of the year. The data today also showed the backlog of vehicles on order rose.