A tug of war ensued last week for control of our Quad-City Times Key 15. Emphatic investor response to some company earnings reports found some shares bid impressively higher. Some similarly emphatic but negative response to company profits or company outlooks sent other area stocks breathtakingly lower. In the end, it was a retreat for the area business barometer, falling 21.42 to close at 2,248.93, following four weekly record highs (1).

Quad-City area employment was a mixed story, coming in Thursday’s report from the Illinois Department of Employment Security. The unemployment rate, closely watched, fell to 4.3 percent of the labor force in September, down from 4.5 percent in August, and down nicely from 5.5 percent one year ago in September. Now read carefully: The labor force here, in the multi-state metro area, is down by 3,942 workers, mostly due to retirements and people leaving the area, down from 191,249 last September to 187,307 now. But, the number of workers on non-farm payrolls is down just a minimal 100 folks, down from 183,900 to 183,800.

So while employment hasn’t gained overall in that year, the available workforce is significantly smaller. A greater proportion of that remaining workforce is employed. Still, like any optimistic community, we could use more workers to offset retirement shrinkage in the workforce. And, we need the jobs to up the demand for them.

Some of those might come from manufacturing, a core sector of our area economy. Nationwide, the Federal Reserve reported on Wednesday that new orders for durable goods, those big-ticket items lasting three or more years, were up an impressive 8.3 percent over last September. Rising orders beget rising manufacturing activity, which in turn begets the need for rising numbers of manufacturing workers.

Now, surely, hurricanes in August and September created some growth in demand for replacement goods. But, while future months will be important to watch, the nationwide 8.3 percent rise in orders seems to be significantly more than hurricane induced orders.

The tug of war in our Key 15 stock got an early tug downward from Arconic’s Monday morning earnings report, with the company reporting third-quarter revenues of $3.2 billion, up 3 percent over one year ago. But, due to some costly adjustments, like accounting for aluminum price changes on its metals inventory, earnings fell from 32 cents per share one year ago to 25 cents. That was a bit less than analysts’ consensus estimates.

Arconic actually reconfirmed its year 2017 earnings estimate. But, importantly, the company announced the appointment of a new chief executive officer from outside the company. Chip Blankenship, a 24-year veteran of General Electric with extensive aerospace business experience, was chosen. But, alas, investors chose that day to focus on the uncertainty of a newcomer taking the reins. Investors sold off shares on Monday, driving Arconic shares down $2.82 to $24.35, a steep 10.4 percent decline. For the week, Arconic was down 2.57 to 24.60 (1).

HNI Company’s report was another tug on the downside. Their quarterly report, out Monday late, resulted in a Tuesday decline of $7.91 to $34.38, an ugly 18.7 percent drop in one day. What happened?

Revenues for HNI, which has office furniture manufacturing and headquarters in Muscatine, climbed 2.5 percent over last year to $599.5 million in the latest quarter. In fact, profits rose a bit more than analysts’ consensus estimate, rising from 80 cents per share one year ago to 82 cents. But, HNI CEO Stan Askren, noted in the prepared commentary, “We are expecting a significant decline in our fourth quarter profit as we work through two major challenges.” He talked about “highly dynamic conditions” in office furniture markets. And he said “operational transformations have been more difficult than anticipated, resulting in higher costs.” Askren said the company is confident in HNI’s ability to meet those challenges. But investors were less so, sending HNI shares down 7.07 for the week to 35.77 (1).

Still, the tug upward was similarly impressive, a full-week gain of 13.42 in the shares of 3M Company to 234.68 (1). With adhesives manufacturing in Cordova, 3M reported record third quarter revenues, up 6 percent over last year to $8.2 billion, Adjusted earnings climbed by 8.3 percent from $2.15 per share one year ago to $2.33. And 3M Company guided investors’ outlook to an increased 2017 profit projection, up 10 percent to 12 percent over 2016 results, CEO Inge Thulin, in attached comments, pointed out impressive sales gains of 13.1 percent in the electronics and energy segment and impressive sales gains of 10.8 percent in the Asia Pacific geographic region, along with expanded profit margins. The strengthening outlook was clearly a motivation for investors to supply the upside tug.

A busy new week brings November and the early reports on October auto sales on Thursday and employment on Friday. But, the week will also bring more company profit reports to put a tug on stock prices and on our Quad-City Times Key 15.

James Victor is senior vice president-wealth management and financial adviser with Morgan Stanley, Davenport.

The Key 15 reflects stocks of local interest. It is not a product and cannot be purchased as one. Information contained herein has been obtained by the writer from sources believed to be reliable, but he does not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results. (1) Source: NYSE

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