U.S. stocks head into fourth quarter with earnings and defensives in focus

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US stocks Q4 earnings focus

Highlights

Nasdaq Composite remains up 15.6% year to date but is 1.6% below its high, while S&P 500 is up 11.8% year to date and sits 2% off its peak.
Consumer-facing stocks such as McCormick are down 8% in three months and 36% below February highs, while Nike trades at a 52-week low, down almost 14% since its last report.
Defensive and security-focused names outperform, with CrowdStrike up 21% in a month at a 52-week high, Palo Alto Networks up 16.5% in three months, and Hewlett Packard Enterprise up 22% in a month.

Market setup for Thursday trading

As reported by CNBC, major U.S. indexes enter Thursday still holding solid year-to-date gains even after recent pullbacks from their highs. The Nasdaq Composite is up 15.6% for the year and stands 1.6% below its high, while the S&P 500 is up 11.8% year to date and sits 2% off its peak.

The Russell 2000 is up 12.7% for the year but is down 9% from its August high. The NYSE Composite is up 6.8% year to date and is 5.5% below its August high, while the Dow Jones Industrial Average is up almost 6% for the year and is off 7% from its high.

On the corporate calendar, Nordic American Tankers CEO Herbjorn Hansson is scheduled to appear on “Morning Call” with Morgan Brennan starting at 5 a.m. Thursday. McCormick is set to report earnings live on “Squawk Box,” while Nike is due to report on “Closing Bell: Overtime.”

Consumer pressure and defensive momentum

Several consumer-facing names remain under pressure. McCormick shares are down about 8% in three months and are 36% below their February high, while Nike stock is down almost 14% since its last report, sits 4% below the high reached a year ago and trades at a 52-week low.

Other stocks at 52-week lows include Deckers, down 36% from its February high, Las Vegas Sands, down 46% from its December high, and McDonald's, down 32% from its March high. VICI Properties is down 30% from the high reached last October, and both SBA Communications and Crown Castle International are down 30% from their highs.

By contrast, defensive and security-related names are showing strength. CrowdStrike hits a 52-week high on Wednesday and is up 21% in a month, Palo Alto Networks also reaches a 52-week high with shares up 16.5% in three months, and Hewlett Packard Enterprise, which also has security programs, is up 22% in a month.

Our earlier report on weakening S&P 500 market breadth explained that the index stayed close to its August record largely because a small group of mega-cap tech leaders propped up headline performance while most constituents fell. It also noted that fewer stocks were holding above key long-term trend levels, a sign investors were turning more defensive amid elevated bond volatility and an uncertain outlook for riskier names.

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