FYI: The Dow Jones Industrial Average extended its recent rally Tuesday as investors grew hopeful that the U.S. and China will roll back tariffs as they work to clinch a partial trade deal.
The blue-chip index rose 30 points, or 0.11%, extending its recent rally. The gains accelerated in afternoon trading as shares of Walgreens Boots Alliance surged on a Reuters report that the company has held talks with private equity firms about potentially going private.
The Nasdaq Composite inched up 0.02%, while the S&P 500 edged down 0.12%. All three indexes closed at records Monday propelled by optimism over trade and a better-than-expected corporate earnings season.
The indexes had opened higher as investors grew hopeful that the U.S. and China will roll back tariffs as they work to clinch a partial trade deal. The “phase one” pact with China had been expected to deter President Trump from imposing new tariffs on Dec. 15, but negotiators now are working on a plan that would also roll back some existing tariffs, The Wall Street Journal reported.
The indexes had opened higher as investors grew hopeful that the U.S. and China will roll back tariffs as they work to clinch a partial trade deal. The “phase one” pact with China had been expected to deter President Trump from imposing new tariffs on Dec. 15, but negotiators now are working on a plan that would also roll back some existing tariffs, The Wall Street Journal reported.
That bullishness appeared to fade somewhat as the South China Morning Post reported that China wants a firmer commitment on removing tariffs.
Investors also parsed new data showing that activity in the U.S. service sector grew at a faster pace in October than in September. The Institute for Supply Management’s nonmanufacturing index was 54.7 in October versus 52.6 the prior month, a higher increase than expected by economists surveyed by The Wall Street Journal. Such data has been closely examined for evidence that U.S. consumers are remaining resilient in the face of a manufacturing slowdown.
The Commerce Department said Tuesday that the U.S. trade deficit narrowed in September as both imports and exports declined, a sign that a trade downturn that began last year is accelerating.
Major U.S. stock indexes have been pushed higher in recent days by better-than-feared corporate earnings. Although profits are on track to decline for a third consecutive quarter, more than three-quarters of the companies in the S&P 500 that have reported have beaten expectations, according to FactSet. And investors have been sharply bidding up the shares of companies that topped expectations.
Shares of software company Adobe rose 3.7% after the company late Monday raised its fourth-quarter revenue target for its digital media segment. Hertz Global Holdings climbed 12% after the car-rental company posted a higher third-quarter profit.
Meanwhile, Uber Technologies shares fell 8.8% after the ride-hailing company posted another quarterly loss and forecast that it would reach profitability by the end of 2021. The shares may face increased pressure Wednesday, when a lockup period ends that prevented early investors and executives from selling shares.
Burger chain Shack Shack shares plunged 19% after disappointing investors Monday evening with a warning that sales will be weaker than expected this fiscal year.
In Asia, Japan’s Nikkei 225 index climbed 1.8% as the nation’s electronics, machinery and financial companies, which have been under pressure from the global trade tensions, gained on the renewed optimism about a deal. The Shanghai Composite Index rose 0.5%. The Chinese yuan hit its strongest level in three months, strengthening against the U.S. dollar.
The sense of diminishing risk in the outlook for global economic growth was reflected in bond markets, a traditional haven for investors. As Treasury prices fell, the yield on 10-year U.S. Treasurys climbed to 1.862% from 1.787% Monday.
The benchmark for global oil prices, Brent crude, rose 1% to $62.76 a barrel.
Regards,
Ted
Bloomberg Evening Briefing:
https://www.bloomberg.com/news/articles/2019-11-05/your-evening-briefingMarketWatch:
https://www.marketwatch.com/story/dow-futures-rise-on-trade-deal-optimism-stocks-heading-for-3-day-win-streak-2019-11-05/printWSJ:
https://www.wsj.com/articles/global-stocks-rise-on-hopes-for-u-s-china-tariff-rollback-11572949668Bloomberg:
https://www.bloomberg.com/news/articles/2019-11-04/asia-stocks-to-rise-after-u-s-records-bonds-drop-markets-wrapIBD:
https://www.investors.com/market-trend/stock-market-today/dow-jones-today-hits-record-high-uber-drops-amd-pops/CNBC:
https://www.cnbc.com/2019/11/05/us-futures-point-to-higher-open-ahead-of-key-economic-data.htmlReuters:
https://uk.reuters.com/article/us-usa-stocks/sp-500-index-holds-steady-after-run-to-record-idUKKBN1XF1P3U.K:
https://uk.reuters.com/article/uk-britain-stocks/primark-owner-oil-majors-push-ftse-higher-idUKKBN1XF10UEurope:
https://www.reuters.com/article/us-europe-stocks/european-shares-hit-more-than-four-year-peak-on-trade-hopes-idUSKBN1XF0ZYAsia:
https://www.cnbc.com/2019/11/05/asia-stocks-november-5-wall-street-record-high-us-china-trade-currencies.htmlBonds:
https://www.cnbc.com/2019/11/05/bonds-treasury-yields-rise-on-us-china-trade-optimism.htmlCurrencies:
https://www.cnbc.com/2019/11/05/forex-markets-us-china-trade-australian-dollar-in-focus.htmlOil
https://www.cnbc.com/2019/11/05/oil-markets-opec-crude-production-in-focus.htmlGold:
https://www.cnbc.com/2019/11/05/gold-markets-us-china-trade-in-focus.htmlWSJ: Markets At A Glance:
https://markets.wsj.com/usMajor ETFs % Change:
https://www.barchart.com/etfs-funds/etf-monitorSPDR's Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-trackerSPDR's Bloomberg Sector Performance Pie Chart:
https://www.bloomberg.com/markets/sectorsCurrent Futures:
