Market Ahead, Dec 6: Top factors that could guide markets today

NSE on Thursday launched Nifty Bharat Bond Index series, which will track a portfolio of AAA-rated bonds issued by government entities

BS Web Team  |  New Delhi  Last Updated at December 6, 2019 08:04 IST

The RBI’s Monetary Policy Committee surprised the street yesterday after voting unanimously to keep the policy repo rate unchanged at 5.15 per cent. The central bank also lowered sharply its FY20 GDP forecast to 5 per cent from 6.1 per cent. The domestic market declined after the RBI’s decision as investors worried over economic growth. The sentiment may continue in today’s session.

Investors will also take note of the oil prices which were trading near a two-month high after OPEC agreed to increase output curbs by nearly 50 per cent in early 2020. Brent futures were up 1 cent at $63.40.

Besides, market participants will look at stock-specific action, foreign fund flows, movement of rupee against the US dollar, and other global factors for further cues.

In a crucial development yesterday, the NSE on Thursday launched Nifty Bharat Bond Index series, which will track a portfolio of AAA-rated bonds issued by government entities. The first two indices in the series are for April 2023 and April 2030.

In stock-specific news, global rating agency Moody’s has downgraded Yes Bank’s long-term foreign currency rating from “Ba3” to “B2” over additional risks to its standalone credit profile from potentially stressed assets and low loss-absorbing buffers.

Globally, Wall Street eked out slight gains on Thursday. The Dow Jones Industrial Average and the S&P 500 closed 0.5 per cent higher each, and the Nasdaq Composite added 0.05 per cent.

Asian stocks held firm on Friday. Japan’s Nikkei rose 0.28 per cent and MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.2 per cent.

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Sensex, Nifty Seen Tad Higher At Open

Indian shares look set to open a tad higher on Friday, mirroring firm cues from other Asian markets as investors look ahead to the release of U.S. payrolls data due tonight.

Trade deal optimism prevails after U.S. President Donald Trump said that U.S.-China trade talks are “moving right along.”

Gold prices held flat and the U.S. dollar nursed losses while the British pound stood tall on expectations that next week’s election will give the Conservative Party the parliamentary majority it needs to deliver Brexit.

Oil held near two-month highs after Saudi Arabia and Russia agreed on further output cuts.

Benchmark indexes Sensex and the Nifty fell around 0.2 percent on Thursday after the Reserve Bank of India (RBI) kept its policy rate unchanged, surprising market participants who were expecting at least a 25-basis points rate cut.

The rupee rose by 24 paise to close at 71.29 against the U.S. dollar as the RBI promised to maintain its accommodative stance and the dollar weakened in international markets.

U.S. stocks recovered from an early slide to end modestly higher overnight after a Chinese official said that trade talks were progressing but Beijing wants a rollback of existing tariffs to be included as a part of any resolution.

Separately, the Wall Street Journal reported that the two nations remain at odds over the value of farm goods Beijing will buy from the U.S.

The Dow Jones Industrial Average and the tech-heavy Nasdaq Composite edged up around 0.1 percent while the S&P 500 gained 0.2 percent.

European markets edged lower on Thursday as investors awaited more clarity on the U.S.-China trade talks and an OPEC meeting.

The pan European Stoxx 600 slid 0.1 percent. The German DAX and the U.K.’s FTSE 100 both dropped around 0.7 percent while France’s CAC 40 index finished

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How You Can Protect Your 401(k) Assets as Recession Looms

The stock market bull run of the past few years has created more than a few 401(k) millionaires. But with economic headwinds increasing, including a trade war that shows no signs of abating, many investors are getting nervous about just how long they’ll remain 401(k) millionaires.

Investors who have made their money in stock markets are aware that a stock market crash could wipe out their wealth just as easily as the bull market grew their wealth.

Many investors, particularly those who are retired or close to retirement, remember what happened in 2008. Many lost over half their savings as stock markets plummeted as a result of the financial crisis. Those investors don’t want to see a repeat of 2008, and they want to do anything they can to avoid making the same mistakes. But with so many investment options out there, what’s the best way for investors to protect their 401(k) assets from losing value in the coming years?

Don’t Stop Contributing to Your 401(k)

If you’re still working and contributing to a 401(k) plan, it’s important that you not stop contributing to your plan, with a few caveats. We’ll assume that, like many Americans, you have employer matching contributions. We’ll also assume that your 401(k) plan offers investment options that aren’t limited just to funds that invest only in stocks.

Because of employer matching contributions, you essentially get free money to invest. In many cases that can double the amount of money that you’re investing in your 401(k) plan. By pulling back on your 401(k) contributions you could be putting those employer matches at risk, costing yourself a lot of money that you could be profitably investing.

Most 401(k) plans offer a variety of investment options in stock funds, whether that be large-cap, mid-cap, or small-cap stock investment

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Dow Jones News: Apple Holiday Sales Seen as Strong; Nike Upgraded to Buy

The Dow Jones Industrial Average (DJINDICES:^DJI) was up just 0.06% on Thursday by 2:30 p.m. EST. With no major news regarding the trade war between the U.S. and China, the stock market struggled to move strongly in either direction.

At the top of the pack were Apple (NASDAQ:AAPL) and Nike (NYSE:NKE), both rising thanks to positive comments from analysts. Apple was up after an analyst predicted a strong holiday quarter for the tech giant, while Nike rose after receiving a buy rating.

A merry Christmas for Apple?

While Apple’s iPhone business has stagnated in terms of units sold over the past few years, Citi analyst Jim Suva expects the company to outperform expectations this holiday season. Suva sees Apple’s pricing strategy and recent demand trends driving an improved Christmas quarter.

Suva boosted his price target from $250 to $300, and he reiterated a buy rating on the stock. Shares of Apple were up 1.4% on the positive analyst commentary.

The iPhone 11.

Image source: Apple.

In addition to being optimistic about the iPhone 11 family, Suva sees the Apple Watch, AirPods, and services as key growth drivers this holiday season. Reports emerged last week that Apple had asked suppliers to ramp up AirPods production, particularly for the high-end AirPods Pro.

While Suva expects Apple’s revenue and earnings to outperform expectations in the holiday quarter, he’s less optimistic about the valuation becoming any richer. Apple currently trades at around 22 times trailing-12-month earnings after a big rally this year.

Suva sees Apple producing fiscal first-quarter revenue of $89.5 billion and earnings of $4.58 per share. Both estimates are above the consensus of $87.9 billion and $4.51, respectively.

With Apple’s price-to-earnings ratio at a multiyear high, the company will need to deliver this holiday season to keep the stock afloat.

Nike scores a buy rating

Apple isn’t the only stock getting some love from analysts. Shares of Nike were up 1.9% after Goldman Sachs added the stock to its Conviction List. Goldman upgraded Nike shares from hold to buy, calling the footwear and apparel giant “a unique asset.”

Goldman cited Nike’s strong brand and a disruptive and innovative strategy as key catalysts that will drive growth, margin expansion, and improved returns on investment capital. China is viewed as a major growth driver, with Goldman expecting Nike to grow sales at a high-teens percentage in the country. The direct-to-consumer segment will account for 50% of revenue in China by 2023, according to Goldman’s estimates.

Nike’s recent results have been solid. Revenue in the fiscal first quarter grew 7% to $10.7 billion, and earnings per share jumped 28% to $0.86. Both figures easily beat analyst expectations. Sales in China were strong, up 27% year over year. Nike’s sales in China have increased by a double-digit percentage every quarter for more than five years.

Including Thursday’s surge, shares of Nike are now up about 29% year to date.

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US stocks close higher amid jobs data

New York, Dec 6 (IANS) US stocks closed higher on Thursday as investors digested the latest jobs data.

On Thursday, the Dow Jones Industrial Average was up 28.01 points, or 0.10 per cent, to 27,677.79. The S&P 500 rose 4.67 points, or 0.15 per cent, to 3,117.43. The Nasdaq Composite Index was up 4.03 points, or 0.05 per cent, to 8,570.70, Xinhua news agency reported.

More than half of the 30 Dow components traded in green territory, with Nike and Apple increasing 2.21 per cent and 1.47 per cent, respectively, the top two gainers.

Eight of the 11 primary S&P 500 sectors traded on an upbeat note, with the materials sector adding 0.66 per cent, the top gainer.

The number of Americans filing applications for unemployment benefits unexpectedly fell last week, according to data released by the US Labor Department on Thursday.

In the week ending Nov. 30, the initial claims for state unemployment benefits dropped 10,000 to 203,000 on a seasonally adjusted basis, said the department.

The four-week moving average was 217,750, a decrease of 2,000 from the previous week’s unrevised average of 219,750, said the department.

Private payrolls, however, increased by only 67,000 in November, according to ADP and Moody’s Analytics on Wednesday.

“The job market is losing its shine. Manufacturers, commodity producers, and retailers are shedding jobs,” said Mark Zandi, chief economist of Moody’s Analytics.

He added that if job growth slows any further, unemployment will increase.

–IANS

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US Indexes End Slightly Higher Thursday

The Dow Jones Industrial Average closed at 27,677.79 on Thursday with a gain of 28.01 points or 0.10%. The S&P 500 closed at 3,117.43 for a gain of 4.67 points or 0.15%. The Nasdaq Composite closed at 8,570.70 for a gain of 4.03 points or 0.05%. The VIX Volatility Index was lower at 14.52 for a loss of 0.28 points or -1.89%.

Thursday’s market movers

U.S. indexes closed slightly higher Thursday. Investors showed optimism over a China trade deal with U.S. officials reporting close contact with negotiators as the Dec. 15 deadline approaches for the next tariff increase. In the energy sector, OPEC reported the potential for more decreases in oil production. Saudi Arabia’s Aramco also debuted its initial public offering, selling three billion shares at 32 riyals ($8.53) each for the world’s largest IPO ever.

Economic reports affecting market trading included the following:

The Balance of Trade report showed a deficit of $47.2 billion in October, improving from $-51.1 billion. Exports were $207 billion and imports were $254 billion. Imports from China were 4.8% lower in October at $1.7 billion. Jobless claims decreased to 203,000 from 213,000. Factory orders increased 0.3% in October following a decrease of 0.8%. Factors orders excluding transportation increased 0.2% following a decrease of 0.3%. The Treasury held auctions for four-week bills at a rate of 1.50% and eight-week bills at a rate of 1.52%.

In the S&P 500, the materials, financial and technology sectors led gains. In the Dow Jones Industrial Average, the following stocks led gains:

Small-cap stocks

In small caps, the Russell 2000 closed at 1,614.83 for a gain of 0.94 points or 0.06%. The S&P 600 closed at 988.01 for a gain of 2.72 points or 0.28%. The Dow Jones U.S. Small-Cap Growth Index closed at 10,326.42 for a gain

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S&P Global: Diversified Business With A Wide Moat

In the past, I covered Moody’s Corporation (MCO) – one of the major credit rating agencies. The biggest competitor of Moody’s Corporation is Standard & Poor’s. The parent company is S&P Global, Inc. (SPGI), which was formerly known as McGraw Hill Financial, Inc. and the rating business is one of four different business segments of this company.

When searching for great businesses with a potential wide moat in the past, I decided that Moody’s Corporation is the better pick for several different reasons (like Warren Buffett holding about 13% of the outstanding shares of Moody’s) and dismissed S&P Global. But now I would like to take the time and analyze S&P Global, which is not only a leading provider of ratings, but also a major provider of benchmarks, analytics and data to the capital and commodities markets worldwide.

S&P Global vs. Moody’s

I probably dismissed S&P Global as an investment due to fluctuations or declining revenue in 2012. When I am scanning for companies that might have a wide moat, I am looking at the development of several metrics during the last decade and as I can spend only a few minutes on every company I don’t have the time for extended research and it happens sometimes that I will dismiss a company although such a dismissal might not be justified.

(Source: Own work based on numbers from Morningstar and Seeking Alpha)

And when looking at S&P Global (red numbers), it seems like revenue was stagnating during the last decade. But these numbers don’t tell us that S&P Global sold several businesses during the past decade and especially in 2012, the company sold its entire education division, known as McGraw-Hill Education to Apollo Global Management (NYSE:APO) and in 2011 that segment generated $2,292 million in revenue, which explains

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3 Dow Stocks to Buy in the Selloff

It could be another December to remember rather than a Santa Claus rally. But beyond 2019 and looking into 2020, Dow stocks AT&T (NYSE:T), Caterpillar (NYSE:CAT) and UnitedHealth (NYSE:UNH) are ready to deliver more secure capital gains and the safety of income all in one investment. Let me explain.

Wall Street is breathing easier today. Back-to-back sessions of elevated tariff threats by the U.S. aimed at friends and foes across both ponds saw the Dow Jones Industrials tumble nearly 2% within a fresh chapter of the risk-off playbook to begin the week. And many Dow stocks like Apple (NASDAQ:AAPL) took it even harder on the chin. Meanwhile, Wednesday’s early headlines out of the NATO summit have investors quickly trying to turn the page.

The broader averages opened firmly higher today on reports Beijing and Washington are still working on the first phase of a trade deal despite POTUS’ prior bullying ways. That has helped the Dow Jones reach a quick gain of 0.75%, while making yesterday’s news a fast money buying opportunity. But for investors with longer horizons, appreciative headline risks of all types are par for the course under today’s leadership. More importantly, it’s time to recognize “we gonna be alright.” And capitalizing on that optimism is made easy in in Dow stocks like T, CAT and UNH.

Let’s take a deeper look at each.

Dow Stocks to Buy: AT&T (T)

Source: Charts by TradingView

AT&T is the first of our Dow stocks to buy. The blue-chip stock currently offers investors an attractive income stream of 5.43%. Moreover, relative strength and capital gains into 2020 look good after a massive cup breakout and successful test of prior resistance.

T Stock Strategy: This Dow stock can be bought today. Shares have just confirmed a weekly reversal low

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Experts expect economy of 2020 to look a lot like 2019. Think you can beat their forecasts?

A presidential election and a trade war may make the economic landscape riskier next year, but two St. Louis economists don’t think they’ll derail U.S. growth.

Ken Matheny of Macroeconomic Advisers and Paul Christopher of Wells Fargo Investment Institute expect 2020 to look a lot like 2019, with moderate economic growth, steady job creation and low inflation.

One difference may be in the stock market. Both forecasters expect modest single-digit gains, but the political calendar could produce dramatic ups or downs.

As I’ve done for 20 years, I’m launching a contest that asks readers to forecast four key economic variables. We’ll get to details in a moment, but first let’s learn more about the experts’ thinking.

2020 Economic Challenge

It’s simple. Submit your predictions of:

% GDP growth % unemployment % inflation (as measured by the CPI) Value of the Dow Jones on Dec. 31, 2020

The grand prize winner will get lifelong fame, Post-Dispatch swag — and the opportunity to appear in an episode of The Bottom Line to discuss their predictions with David Nicklaus and Jim Gallagher!

Submit your forecast by Dec. 31. Winners will be announced in early 2021.

Matheny believes the U.S. gross national product can grow 2.2% next year, close to its 2019 pace. Christopher is less optimistic, predicting 1.8% GDP growth.

Christopher predicts a “noticeably slower first half” and then an acceleration after mid-year. He says manufacturing, which has been weak recently, may not regain its footing for several more months.

Matheny says consumer spending will continue to drive economic growth, with the housing market getting a boost from lower interest rates.

One question is whether Congress will pass all the spending bills authorized in this year’s budget agreement. If

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