Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
With the government back in action, and the debt ceiling now a non-issue for at least a few months, stocks climbed today, though the Dow Jones Industrial Average (^DJI +1.24%) finished flat on poor earnings reports from IBM, UnitedHealth, and Goldman Sachs. After opening down, the S&P 500 gained 12 points, or 0.7%, to finish at a record high of 1,733. Though some economists estimated that the government shutdown cost the country over $20 billion, investors seem to be ignoring the damage and are glad to put the crisis behind them, where they can now focus on earnings season. The debacle has also likely removed the specter of the Fed stimulus taper for the near future, which had dominated market chatter before the shutdown, further encouraging investors.
Initial unemployment claims from last week were elevated for the second week in a row, coming in at 358,000, due, in part, to a backlog from a technical glitch in California. Economists had expected a total of 330,000. There was no noticeable increase in furlough-related filings for non-federal workers, while 70,000 government employees filed for benefits in the week ending October 5, according to reports. Data for federal workers is delayed by a week. Meanwhile, the Philadelphia Fed's index of mid-Atlantic manufacturing activity showed another strong month, at 19.8, well above expectations of 7.0, indicating a strong expansion.
Among stocks making news after hours today, Chipotle Mexican Grill (CMG +1.28%) shares moved up 8% as the burrito chain beat estimates on revenue and comps, but missed on profits. Chipotle shares reached an all-time high on the news as revenue grew 18%, to $826.9 million, beating expectations of $820.3 million, while same-store sales increased 6.2%, better than estimates of 4.7%. Per-share profits came in at $2.66, short of the $2.78 consensus, as food costs rose, which was due, in part, to switching from GMO soy oil to non-GMO sunflower and rice bran oils. Wall Street, however, overlooked the shortfall on earnings, as strong comps prove there's still organic growth left in the fast-casual star, and Chipotle said it planned to raise prices by 3% to 5% next year to counter rising food prices, which should give profits an additional jolt.
Google (GOOG +2.53%) also jumped after hours, gaining 8% after reporting earnings. The search giant said that paid clicks grew by 26%, enough to overcome a decline in cost-per-click of 8%. Shrinking cost-per-click rates have been a long-standing concern of investors, but volume is one way to solve that problem. Internet-based revenue jumped 23% in the quarter, to $10.8 billion, while overall revenue increased 12%, to $14.89 billion, beating estimates of $14.79 billion. Earnings per share also easily topped the analysts' view of $10.36, hitting $10.74. Google stock is now up a whopping 35% this year.
