Dow Delivers Best Two-Day Rally in Two Years, Stocks Led Higher by GM, Facebook

Here Are 3 Hot Things to Know About Stocks Right Now

• The Dow Jones Industrial Average rose Wednesday, posting its best two-day rally in more than two years, as the blue chip index closed out a tough month that saw the index fall about 5%.
• Facebook Inc. (FB)  rose 3.8% after the social media giant posted quarterly earnings that beat Wall Street estimates. 
• General Motors Co. (GM)  soared 9.1% after the automaker’s third-quarter earnings smashed forecasts.

Wall Street Overview

Stocks jumped on Wednesday, Oct. 31, with Wall Street extending the previous session’s solid gains on the backs of solid earnings reports from General Motors Co. (GM) and Facebook Inc. (FB) .

The Dow Jones Industrial Average rose 241 points, or 1%, to 25,115.76, the S&P 500 gained 1.1%, and the Nasdaq was up 2%. After stocks ended sharply higher on Tuesday, Oct. 30, the Dow and the Nasdaq have posted their best two-day results since February 2016 and the S&P 500 had its best two days since June 2016.  All three indexes are niow positive for the year.

Facebook rose on Wednesday after the social media giant said near-term costs linked to keeping its website safe from fake news and data breaches, as well as pivoting its business toward messaging and video traffic, would be less than expected, softening the blow of weakening revenue.

Facebook beat Wall Street estimates with third-quarter earnings of $1.74 a share, but narrowly missed expectations for revenue growth with a top line of $13.73 billion as the number of global users across its platforms rose to 2.6 billion. The company said 2018 expenses would rise between 50% and 55% from last year — after topping $8 billion over the third quarter — before easing to around 40% to 50% next year, with both estimates coming in lower than expectations.

Facebook also said users were likely to pivot toward messaging and video content, but the company will need to be faster and more accurate at finding ways to monetize that move without alienating or annoying them. That shift, Facebook said, would mean slower near-term revenue but a better longer-term business model.

“Bottom line, we believe the quarter to have been highly encouraging as management reaffirmed its positive outlook on the potential to monetize Stories and other growth initiatives such as Instagram and video content, while calling out a continued interest in pursuing augmented/virtual reality initiatives such as the Oculus platform,” wrote Jim Cramer and the Action Alerts PLUS team, which holds Facebook in the AAP Charitable Trust Portfolio.

General Motors reported third-quarter adjusted earnings of $1.87 a share, smashing estimates of $1.25. Revenue at the carmaker rose 6% to $35.8 billion and came in higher than forecasts of $35.3 billion.

GM said it expects 2018 adjusted earnings of $5.80 to $6.20 a share. Analysts expect $5.86. The company said full-year profit could surprise to the upside thanks to favorable tax rates and improving performances in key markets in the U.S. and China. The stock jumped 8.7%.

General Electric Co. (GE – Get Report) slipped 0.9% on Wednesday, Oct. 31, after Moody’s Investors Service downgraded GE and GE Capital’s ratings to Baa1 from A2.

Yum! Brands Inc. (YUM) posted third-quarter adjusted earnings of $1.04 a share, beating analysts’ estimates of 84 cents. Revenue of $1.39 billion also topped forecasts. Yum!, the owner of Taco Bell, Pizza Hut and KFC, rose 4.6%.

Clorox Co. (CLX) posted fiscal first-quarter earnings of $1.62 a share, 4 cents better than estimates. The company also reduced its earnings guidance for fiscal 2019. The stock fell 3% on Wednesday.

Estee Lauder Cos. (EL) earned $1.47 a share on an adjusted basis in its fiscal first quarter, beating estimates of $1.22. Revenue rose to $3.52 and topped forecasts of $3.47 billion. The company also raised its quarterly dividend to 43 cents a share from 38 cents. Shares rose 4.8%.

Sprint Corp. (S)  rose 7.6% after it earned 5 cents in its fiscal second quarter, beating analysts’ forecasts that called for a loss of 1 cent. Revenue of $8.43 billion beat estimates of $7.97 billion.

Shares of eBay Inc. (EBAY)  were up 5.9% after the online retailer reported third-quarter adjusted earnings of 56 cents a share, beating expectations by 2 cents. Revenue of $2.65 billion matched analysts’ forecasts.

The company said it expects adjusted earnings in the fourth quarter of 67 cents to 69 cents a share on sales of $2.85 billion to $2.89 billion. Analysts were calling for adjusted profit of 67 cents a share on revenue of $2.89 billion.

The private sector in the U.S. added 227,000 jobs in October, according to the ADP National Employment Report. Economists expected 189,000. The official U.S. jobs report for October will be released on Friday, Nov. 2.