Market Recap: Thursday, Oct. 14

Jack Manley, J.P. Morgan Asset Management Global Market Strategist and Melissa Brown, Qontigo Managing Director of Applied Research, join Yahoo Finance to break down the day's market moves.

Video Transcript

- We've got about two minutes left until the closing bell. You're looking at gains across the board. The Dow up just around 520 points. We have Jack Manley. He's JP Morgan Asset Management Global Market strategist here, along with Melissa Brown, Qontigo Managing Director of Applied Research.

Melissa, let's start with you. When you look at gains like this today across the board, the Dow, S&P, and NASDAQ all in the green, all up just over 1.5%. What's your big takeaway from today's rally?

MELIUSSA BROWN: I mean, it is kind of surprising. I think we've been looking at kind of sentiment that's been declining, and so it is surprising. I guess some of the earnings news has been quite good and the market was happy to see that. But yeah, it is a bit surprising to see such a strong reaction today.

- Jack, what about you? What do you think?

JOHN MANLEY: I think surprising is a good way to put it. We've had a lot of volatility recently and I think markets are looking for any little glimpse or glimmer of good news. The earnings season to Melissa's point, has been good so far and if history suggests anything, it's only going to get better from here. We've also seen some really encouraging jobless claims data out this morning. The lowest numbers posted, I believe since before the pandemic. So very clear sign that the labor market continues to heal. This in and of itself I guess, was enough to get markets gas today and that's why we're seeing such strong performance.

- All right. Well, let's take a look at that strong performance here with the last couple of seconds of the trading day. Again, the Dow up 532 points. We were just speaking about the strong earnings reports. Walgreens and UnitedHealth, the top two performers in the Dow today, moving to the upside as a result of what they did report before the bell. Walgreens up just over 7%. UnitedHealth up just around 4%.

(BELLS)

- All right, that's a wrap and here's where we're going to settle on a day where a lot of people are feeling green, seeing green, and feeling good about it. Dow up about 533 points. The S&P 500 up almost 75 points and the NASDAQ up more than 1.5%, will settle around 200 to one points to the upside.

One thing is Shawna was just talking about some of the action, all the sectors in the green today, we did see utilities up, about 1%, but materials up more than 2, 2.4% and then again, we also saw some rise in energy sector of 1, 1.5%. Consumer staples up 1%. Consumer discretionary up almost 1%.

Let's go back to the panel and talk about something we were able to put into the rearview mirror but it's coming at us pretty fast. And I'm talking about Jack, what you pointed out with the debt ceiling. How much of a threat we're going to get or we're going to get past earnings season and then I know I'm in the media business, we're going to start doing all of the scary headlines. Disaster, disaster, disaster because of the debt ceiling. People are jumping back into the market today but it seems to me they may exit when we start scaring them.

JOHN MANLEY: Hey Adam, very rarely do the headlines capture the actual sort of impact of anything out there, but that is one exception I would say, to the rule. The US defaulting on its debt ceiling would be nothing short of a disaster for a number of different reasons. Now, I don't think it's going to happen. I mean, we've raised the debt ceiling dozens of times in the last 60 years or so. We always managed to avoid the crisis. We always seem to play chicken a little bit longer than the previous times. And so I do think there's going to be volatility here but I don't think we're going to see a true stalemate here. I think we do see the debt ceiling get moved, but investors should be aware that while it's resolved for now, it's not resolved forever and we've just kicked the can down the road and exactly to your point, we're going to be dealing with this all over again in just a few short months.

- Melissa, do you agree with that and do you think a lot of that risk has been priced into the market? I

MELIUSSA BROWN: Do agree with that. And I think that we also just need to keep an eye on the Fed and how they're going to deal with whatever the aftermath is. I think that's been know the liquidity that they've been providing has provided major support for markets in the face of a lot of other bad news. And so if the Fed were to begin its tapering, as they have kind of mentioned they might do, on top-- if we didn't raise the debt ceiling that could be extremely bad news. But even if we do, I think at some point what the Fed does may have a bigger impact.

- Melissa, the reason we bring people like you into the program and like Jack into the program is that you have sound logic that keeps us grounded and yet, so many of us make our decisions, even with investing, based on our emotions. And you've pointed out that investor sentiment right now is weakening. What is that telling the rest of us because we are listening to you loud and clear. Melissa.

MELIUSSA BROWN: Well, I'm sorry to be the logical one but I think with sentiment weakening, meaning things like the stocks that investors buying have typically been ones that are more defensive and so on. I think that means that if bad news does come out, they tend to have a much bigger reaction. If sentiment is positive and bad news comes out then the market doesn't seem to react so much. But if some sentiment is negative and trending even more and more negative, I think let's say some companies report bad earnings news or we do have the Fed tapering or any of a number of other things that we know are there on the horizon that could be a problem.

- Jack, speaking of sentiment, I mean, one thing that could affect that tomorrow is when we get that retail sales number out before the bell. Of course, if it's a stronger number we'll see sentiment rise. If it's a weak number, that's going to be a little bit worrisome. But how would you characterize the strength of the consumer right now heading into the holiday season?

JOHN MANLEY: Consumers still seems to be in a pretty good position right now. I mean, we look at some of the checking and savings account data that's out there. People have elevated balances relative to where they were before the pandemic. A lot of that having to do with all the stimulus that is still kind of sloshing around in people's pockets. They have the ability to spend.

Now, how their sentiment unfolds and are they willing to spend, that a different question. If they're feeling apprehensive about what's going on in markets if they're feeling apprehensive about the pace or the durability of the recovery, well, then that may keep them on the sidelines. But in terms of their ability, I think the consumer is in excellent shape right now. Quite healthy and very much able to spend those dollars.

- All right, Jack Manley, always great to speak with you. Thanks so much for taking the time to join us. And Melissa Brown, great to see you as well. We look forward to having you both back again soon.

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