US stocks – 12-11-19

NEW YORK, NOVEMBER 13, ARMENPRESS. USA main indexes values for 12 November:“Armenpress” reports the value of Dow Jones stood at 27691.49 points, S&P 500 up by 0.16% to 3091.84 points, Nasdaq up by 0.26% to 8486.09 points.The Dow Jones Industrial Average is one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow. It measures the daily stock price movements of 30 large, publicly-owned U.S. companies.S&P 500 measures the performance of 500 widely held common stocks of large-cap U.S. companies.NASDAQ measures a number of indices reflecting the reaction of USA’s high tech markets and business environments on the country’s political and economic developments which have an impact on high tech markets.

Stocks split as uncertainty reigns in US-China trade talks

NEW YORK — U.S. stocks were split on Monday as uncertainty continues to hang over U.S.-China trade talks, or at least over investors’ perception of them.

The stock market has been rallying for five weeks in part on optimism that the United States and China are nearing a stopgap deal to calm their dispute. But President Donald Trump said over the weekend that reports about U.S. willingness to lift tariffs were “incorrect,” only two days after a Chinese official said both sides agreed to rollbacks if talks progress.

Stocks sank as soon as trading began Monday, and the S&P 500 dropped as much as 0.6% from its record level. But indexes pared their losses as the day progressed, and the Dow Jones Industrial Average turned positive in the afternoon.

A still-strong job market, interest-rate cuts by the Federal Reserve and better corporate earnings in the summer than analysts expected have all contributed to the nearly 9% leap for the S&P 500 since late August. But stocks lately have been trading on every scintilla of news related to U.S.-China trade negotiations.

Stocks in the financial and energy industries have been generally rising since Trump said last month that the U.S. and China were close to “Phase One” of a trade deal. But these so-called “cyclical” stocks, whose profits are closely tied to the economic cycle, were among Monday’s losers. Such sudden snaps in movement are frustrating for investors who prefer looking at the longer term.

“The market is myopically focused on the next minute,” said Michael Liss, senior portfolio manager at American Century Investments.

“If I own Chevron or Total, which I do, and we don’t get a ‘Phase One’ signing before the end of the year, I’m not going to sell those stocks,” he said. “I just don’t think that over a three- or five-year time frame, oil demand is going to be dented because of that” even if it “flies in the face of everyone selling cyclicals because we don’t have a trade deal.”

KEEPING SCORE: The S&P 500 was down 0.2%, as of 2:45 p.m. Eastern time.

The Dow rose 15 points, or 0.1%, to 27,697, and the Nasdaq was down 0.1%.

Trading was closed in the Treasury bond market in observance of Veterans Day.

DEFENSE FIRST: Real-estate stocks in the S&P 500 rose 0.4% for the biggest gain among the 11 sectors that make up the index.

The group pays relatively big dividends, and investors have often flocked to them and other “defensive” investments when worries are high that the trade war will hurt the economy.

WEEK AHEAD: Low interest rates have been a big driver for the stock market’s rally, and Fed Chairman Jerome Powell will give testimony on Capitol Hill about the economy on Wednesday. Most investors expect the Fed to keep interest rates on hold for now after cutting them three times since the summer.

The Labor Department will report October data for the Consumer Price Index on Wednesday and for the Producer Price Index on Thursday. The Commerce Department will report retail sales data for October on Friday.

Earnings season is close to complete, and nearly 90% of the companies in the S&P 500 have reported their profits for the July-through-September quarter, according to FactSet.

DEAL CHATTER: Walgreens Boots Alliance rose 4.6% after Bloomberg reported that private equity giant KKR is interested in buying the drugstore chain. Media reports have fueled speculation since last week about a potential Walgreens sale.

OVERSEAS: Asian markets fell. Hong Kong’s Hang Seng slid 2.6% as tensions intensified between police and political protesters.

China’s Shanghai Composite index declined 1.8%, Japan’s Nikkei 225 lost 0.3% and South Korea’s Kospi dropped 0.6%.

European markets were mixed. Britain’s FTSE 100 index slipped 0.4%, France’s CAC 40 added 0.1% and Germany’s DAX lost 0.2%.

Late push sends S&P 500 index to another record high close

Stocks wobbled between small gains and losses through Friday amid conflicting signals about the progress being made by negotiators in the U.S.-China trade war. The S&P 500 and Treasury yields fell after President Donald Trump said he had not agreed to roll back any tariffs, but a late push in the afternoon returned indexes to record heights. The S&P 500 closed out a fifth straight week of gains, which matches its longest winning streak in the last two years.

On Friday:

The S&P 500 index rose 7.90, or 0.3%, to 3,093.08.

The Dow Jones Industrial Average edged up 6.44 points, or less than 0.1%, to 27,681.24.

The Nasdaq gained 40.80, or 0.5%, to 8,475.31.

The Russell 2000 index of smaller companies rose 4.87, or 0.3%, to 1,598.86.

For the week:

The S&P 500 is up 26.17 points, or 0.9%.

The Dow is up 333.88 points, or 1.2%.

The Nasdaq is up 88.91 points, or 1.1%

The Russell 2000 is up 9.53 points, or 0.6%.

For the year:

The S&P 500 is up 586.23 points, or 23.4%.

The Dow is up 4,353.78 points, or 18.7%.

The Nasdaq is up 1,840.04 points, or 27.7%.

The Russell 2000 is up 250.30 points, or 18.6%.

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The US Blinks While Hong Kong Sinks

This morning the Financial Times is reporting that the US administration is considering dropping tariffs on $112 billion of Chinese goods in return for a few goodies from China to get an interim trade deal across the line this month. One of those is that China’s President Xi will have to travel to the US for a signing ceremony, meaning his aids are probably dusting of the atlas to show him where Iowa is this morning. It could be interpreted as the US blinking first as the presidential impeachment hearings gather momentum, and we approach the holiday season and then an election year.

Off course this will all have to be signed off by President Trump, but it is hard to see it appearing in the media unless the President, in his wisdom and foresight, was seriously considering it. Wall Street’s three leading indices all closed at record highs overnight, almost entirely driven by trade optimism, and this news, should it be correct, will undoubtedly increase those tailwinds in Asia today.

Asia itself has been busy, with the Regional Comprehensive Economic Partnership (RCEP) looking like a done deal with the withdrawal of India from the negotiations. India was the last holdout for the RCEP, which spans the world from New Zealand to China and almost everyone else in between. With the Trans-Pacific Partnership (TPP) almost ready for signing as well, large parts of the world appear to be moving forward sans the US, (and India), on trade. No one can doubt the importance of the US consumer of last resort to the world, but the rest of the world is certainly not standing by idly to be beholden to it, or its President, in the future.

Things go from bad to worse in Hong Kong which officially entered a recession last week. Hong Kong Markit PMI plunged to 39.3 from 41.5 last week, a 21 year low not seen since the depths of the late 90’s Asia crisis. ( does anybody else remember that?) The ongoing protests and the ensuing disruption if anything, appear to be spreading rather than abating. Looking on the bright side of life, a resolution acceptable to both sides would see an equally aggressive rebound no doubt. It is just that it is hard to see what that resolution would be with Beijing in no mood for concessions. It will likely mean that the Hang Seng underperforms the rest of the region for the foreseeable future, especially some of their big-name banks.

The China Caixin Services PMI has just been released and has disappointed, falling to 51.1 against an expected print at 52.8. The composite PMI though has eked out a small gain to 52.0. The fallout should be limited though, as markets concentrate on the industrial PMI’s and their rebound potential if an interim trade deal is signed this month.

US Factory orders sank 0.60% overnight in another worrying sign that the trade war is not making America great. US data remains healthy overall but is slowing, and this may be focussing the White House’s mind on tariffs. The American President, as opposed to the Chinese one, is required to answer to voters every five years, and that time is coming uncomfortably close.

The RBA releases its interest rate decision at 1130 SGT and is expected to hold rates at a record low of 0.75%. The RBA preferring to let previous cuts work their way through the system whilst keeping one eye on the progress of the US-China trade dispute.

Equities

Wall Street’s major indices closed at record highs overnight, driven by trade optimism. The S&P500 rose 0.37% to 3078, the Nasdaq rose 0.56% to 8433, and the Dow Jones rose 0.42% to 27, 463. Under Armour, Uber and Shake Shack all felt the wrath of investors for missing earnings targets (losses in Uber’s case). However, Warren Buffet, a man who refuses to spell the word unicorn let alone utter it, did what he has always done, increased profits at his Berkshire Hathaway.

Regionally, the Australian ASX is almost flat with most participants at the racecourse or TAB. The Nikkei has returned from holiday and has made up for lost time, racing higher by 1.54%. The Kospi is 0.11% higher and the Singapore STI 0.18% higher, weighed by lacklustre results from OCBC and Capital Land.

The Shanghai Comp has shrugged off the Caixin PMI, posting a 060% gain this morning but the Hang Seng is flat, weighed down by the shocking Markit PMI.

Trade will, of course, continue to take centre-stage. With so much optimism and exuberance being built into financial markets, traders should watch for negative headlines surprises. Sentiment is a harsh mistress and a fickle one and comes in positive and negative versions.

Currencies

The US dollar strengthened overnight as treasury yields rose slightly and international funds flowed into US equity markets. In the greater scheme of things, currency markets continue to await belligerently for an interim trade deal to get signed, rather than by into the hype. Having been burned by the US President’s, social media account before; they will not so easily be fooled again.

Assuming the Federal Reserve does what it says, and stays on hold for the foreseeable future, higher US yields than most of its G-10 contemporaries will continue to support the dollar into 2020. There may be temporary, even multi-week, dips along the way but yield differential will rule in the end until the US and China comprehensively sort out their trade dispute.

The dollar index rose 0.32% to 97.55, led by looses in JPY and CHF as the street continues its rotation out of haven currencies. Local currencies though, should benefit today from the positive developments on the regional trade deals, and continued progress, real or imagined, on the interim US-China trade agreement.

Oil

It was all about trade yet again overnight for energy markets. The positive noises from Washington DC lifting oil yet again overnight. Brent crude rose 0.70% to $62.45 a barrel, and WTI rose 0.65% to $56.50 a barrel.

In fact, both contracts printed much higher intra-day highs overnight to near $63.20 and $57.50 respectively. US factory orders probably took the edge of the rallies late in the session, leaving both contracts in the green but less spectacularly so by session’s end. It may suggest that the rallies in both contracts are reaching their maximum levels for now and that crude itself, could be vulnerable, perhaps aggressively so, if investor sentiment rapidly changes.

Gold

Gold disappointed and edged lower overnight as the dollar rose, investors rotating into equities and emerging markets as trade hopes increased. Gold fell 0.30% to $1509.00 an ounce.

The net result was that gold is now solidly back into its longer-term range of $1475.00 to $1520.00. It is developing a disturbing habit of whipsawing traders as it approaches each side of the range. It will take some sort of significant event to break gold from its lethargy, and that will most likely be a positive or negative trade development.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley
Based in Singapore, Jeffrey has over 25 years experience in the financial markets, having traded currencies, options, precious metals and futures. Jeffrey started his career at Barclays Bank in New Zealand. However he has spent most of it in London and Asia.Jeffrey focuses on the Asia time zone across asset classes. A regular commentator on business news TV and Radio, he is originally from New Zealand and holds an MBA from Cass Business School, London.
Jeffrey Halley

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US and China agree to 'phase one deal' in trade war, stocks rally

Stocks slid off their best levels of the session on Friday after the U.S. and China agreed to a “phase one deal” in the trade war, but still managed to post strong gains.

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The deal, which has been agreed to in principle and will take three to five weeks to write, includes China agreeing to raise its agricultural purchases to between $40 billion and $50 billion from $8 billion to $16 billion, in addition to making reforms on intellectual property and financial services. The U.S. will not be raising tariffs from 25 percent to 30 percent on Oct. 15. A decision has not yet been made on the tariff increase scheduled for Dec. 15.

A comprehensive trade deal will have two or three phases, according to Trump. China’s trade team is calling the agreement a “pause” in the trade war, and not a deal.

The Dow Jones Industrial Average was up as much as 517 points in the moments following the announcement before finishing higher by 319 points, or 1.2 percent. The S&P 500 and Nasdaq closed up 1.1 percent and 1.3 percent respectively.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 27347.36 +301.13 +1.11%
SP500 S&P 500 3066.91 +29.35 +0.97%
I:COMP NASDAQ COMPOSITE INDEX 8386.39787 +94.04 +1.13%

The October reading of the University of Michigan Consumer Sentiment released Friday morning hit a three-month high of 96, up from 93.2 the prior month.

In stock news, trade-sensitive names were charging higher.

Ticker Security Last Change Change %
CAT CATERPILLAR INC. 144.49 +6.69 +4.85%
DE DEERE & COMPANY 176.11 +1.97 +1.13%
AMD ADVANCED MICRO DEVICES INC. 34.89 +0.96 +2.83%
INTC INTEL CORPORATION 56.51 -0.02 -0.04%

General Motors shares gained after the automaker provided fresh details on negotiations with the United Auto Workers union. GM, in a letter, outlined some revised points on its offer to the union.

Investors are also eyeing Apple, which hit an all-time high after a Wall Street analyst raised his price target. Wendy’s also saw a nice pop after disclosing that sales in the third-quarter were stronger than expected.

Ticker Security Last Change Change %
GM GENERAL MOTORS COMPANY 37.97 +0.81 +2.18%
AAPL APPLE INC. 255.82 +7.06 +2.84%
WEN THE WENDY’S COMPANY 20.73 -0.46 -2.15%

In commodities, soybeans were trading at their highest level since the start of the trade war. The legume was trading up 1.46 percent at $9.37 a barrel. Oil prices spiked 2.3 percent after a rocket attack on an Iranian tanker. Global investors are also expecting to hear from Saudi oil giant Aramco as it prepares for its initial public offering. Early reports indicate the company’s valuation may around $1.5 trillion, slightly below the $2 trillion Crown Prince Mohammed bin Salman was aiming for.

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In Europe, London’s FTSE gained 0.3 percent, Germany’s DAX added 1.9 percent and France CAC was higher by 1.2 percent.

In Asia, China’s Shanghai Composite finished higher by 0.9 percent on Friday and 2.4 percent for the week. Tokyo’s Nikkei closed up 1.2 percent and 1.8 percent for the week. Hong Kong’s Hang Seng ended the session higher 2.3 percent and 1.9 percent for the week.

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FOX Business’ Ken Martin and The Associated Press contributed to this report.

US jobs data, trade progress boost S&P, Nasdaq to record highs

New York: US stocks climbed on Friday as the S&P hit an intraday record for the fourth time this week after an upbeat US jobs report and data on Chinese manufacturing lessened concerns about slowing global growth.

Job growth slowed less than forecast in October, as a drag from a strike at General Motors was made up for in other areas of the labour market, while job gains in the prior two months were stronger than previously thought.

“It’s really good. The market should like it because obviously with the GM strike, manufacturing being affected by that, it is a very nice report and one people should be pretty excited about overall,” said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.

The strong jobs number helped overshadow a report that showed the manufacturing sector contracted for a third straight month.

Along with the S&P’s new high, the Nasdaq topped its July intraday record after both indexes closed out October with their best monthly performance since June as quarterly earnings have come in stronger than anticipated and US-China trade rhetoric has appeared productive.

Prior to the jobs report, sentiment was supported by data showing China manufacturing activity unexpectedly expanded in October, easing concerns about a slowdown in demand from the world’s second-largest economy as a result of US tariffs.

The Dow Jones Industrial Average rose 250.48 points, or 0.93%, to 27,296.71, the S&P 500 gained 24.68 points, or 0.81%, to 3,062.24 and the Nasdaq Composite added 73.29 points, or 0.88%, to 8,365.65.

US-China trade news remained supportive for stocks, as Beijing’s state media Xinhua News Agency reported the two countries have “reached consensus on principles.” Earlier, US commerce secretary Wilbur Ross said the “phase one” trade pact with China appeared in good shape.

About 76% of the 356 S&P 500 companies that have reported so far have beaten profit estimates, according to Refinitiv data.

However, profit growth forecasts for the next four quarters have been revised lower, even as expectations for a decline in third-quarter earnings have shrunk to 0.8% from 2.2% at the start of October.

Oil major Exxon Mobil Corp rose 2.7% after it beat recently lowered third-quarter profit expectations. The energy sector gained 2.29% as the best-performing S&P sector, and oil prices jumped on trade deal progress.

Qorvo jumped 19.71% after the Apple supplier announced a $1-billion share buy-back plan and forecast third-quarter revenue above expectations.

But Pinterest plunged 16.39% after the online scrapbook company missed quarterly revenue estimates. Arista Networks slumped 24.8% after the cloud infrastructure supplier forecast current-quarter revenue much below Wall Street expectations.

Advancing issues outnumbered declining ones on the NYSE by a 2.53-to-1 ratio; on Nasdaq, a 3.00-to-1 ratio favored advancers.

The S&P 500 posted 41 new 52-week highs and two new lows; the Nasdaq Composite recorded 99 new highs and 31 new lows.

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Dow's 1% Halloween skid wipes out weekly gain

The Dow Jones Industrial Average turned negative for the week Thursday afternoon as losses for the blue-chip index gathered steam. The Dow DJIA, +1.11% was most recently down 259 points, or 1%, at 26,930, with that decline pushing its weekly return into negative territory, down 0.1%, according to FactSet data. The broader market was trading lower amid doubts about a Sino-American trade deal and further evidence that the economy was weakening, even after the Federal Reserve cut interest rates for a third time in a row on Wednesday. The S&P 500 index SPX, +0.97% was down 0.1% at 3,024, after having carved out its second record close this week a day ago. It was up less than 0.1% for the week. Meanwhile, the Nasdaq Composite Index COMP, +1.13% was down 0.5% at 8,259, clinging to a 0.2% weekly gain.

Here is What Hedge Funds Think About Portland General Electric Company (POR)

Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before the Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first half of 2019, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first half still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Portland General Electric Company (NYSE:POR) changed recently.

Portland General Electric Company (NYSE:POR) was in 18 hedge funds’ portfolios at the end of the second quarter of 2019. POR has seen a decrease in hedge fund sentiment recently. There were 19 hedge funds in our database with POR positions at the end of the previous quarter. Our calculations also showed that POR isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Clint Carlson, Carlson Capital

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the fresh hedge fund action regarding Portland General Electric Company (NYSE:POR).

What does smart money think about Portland General Electric Company (NYSE:POR)?

Heading into the third quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards POR over the last 16 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

POR_oct2019

Among these funds, Renaissance Technologies held the most valuable stake in Portland General Electric Company (NYSE:POR), which was worth $126.3 million at the end of the second quarter. On the second spot was Carlson Capital which amassed $37.7 million worth of shares. Moreover, GLG Partners, AQR Capital Management, and ExodusPoint Capital were also bullish on Portland General Electric Company (NYSE:POR), allocating a large percentage of their portfolios to this stock.

Seeing as Portland General Electric Company (NYSE:POR) has faced a decline in interest from the smart money, it’s easy to see that there was a specific group of hedgies that elected to cut their entire stakes by the end of the second quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest stake of the 750 funds watched by Insider Monkey, valued at about $3.1 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund said goodbye to about $1.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds by the end of the second quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Portland General Electric Company (NYSE:POR) but similarly valued. We will take a look at Nexstar Media Group, Inc. (NASDAQ:NXST), Jabil Inc. (NYSE:JBL), Southwest Gas Corporation (NYSE:SWX), and Armstrong World Industries, Inc. (NYSE:AWI). This group of stocks’ market caps are closest to POR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NXST 40 1117748 9
JBL 26 315043 6
SWX 16 246360 -4
AWI 30 531242 5
Average 28 552598 4

View table here if you experience formatting issues.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $553 million. That figure was $280 million in POR’s case. Nexstar Media Group, Inc. (NASDAQ:NXST) is the most popular stock in this table. On the other hand Southwest Gas Corporation (NYSE:SWX) is the least popular one with only 16 bullish hedge fund positions. Portland General Electric Company (NYSE:POR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on POR, though not to the same extent, as the stock returned 4.8% during the third quarter and outperformed the market.

Disclosure: None. This article was originally published at Insider Monkey.

Merck, Pfizer spur S&P 500 to record high; Alphabet weighs on Nasdaq

© Reuters. FILE PHOTO: Traders work on the floor at the NYSE in New York© Reuters. FILE PHOTO: Traders work on the floor at the NYSE in New York

By Arjun Panchadar

(Reuters) – The S&P 500 touched a new record high on Tuesday as investors cheered strong earnings from big drugmakers Merck and Pfizer , while a disappointing profit from Google parent Alphabet kept the Nasdaq firmly in the red.

Hopes of a U.S.-China trade deal and expectations of another rate cut by the Federal Reserve when it concludes its two-day meeting on Wednesday have kept markets inching higher this week.

Merck & Co Inc (N:) and Pfizer Inc (N:) both gained about 3% after reporting upbeat third-quarter results. The healthcare sub-index (), which has been the second-worst performer among the 11 major S&P 500 sectors this year, rose 1.2%.

“The healthcare stocks are up after earnings and that’s a good sign,” said Shawn Cruz, manager of trader strategy at TD Ameritrade in Jersey City, New Jersey.

“Some of those stocks have gotten a little bit beat up due to political risk so there is a lot of room for an upside move.”

Shares of Alphabet Inc (O:), however, slipped 1.8% as its quarterly profit missed estimates due to higher costs.

Third-quarter earnings of S&P 500 companies have largely been better than expected, easing some of the concerns over growth which have dogged markets this year, with over 78% of the 204 firms to report so far surpassing profit expectations, according to Refinitiv data.

“There is a little bit of a ray of sunshine poking through some very dark clouds in the market with … talks regarding the U.S.-China trade continuing to be more positive than negative,” said John Brady, senior vice president at R.J. O’Brien & Associates in Chicago.

Other marquee names reporting this week include tech and internet heavyweights Apple Inc (O:) and Facebook Inc (O:) as well as oil majors Exxon Mobil Corp (N:) and Chevron Corp (N:).

All eyes will now be on the Fed meeting, where the central bank is widely expected to deliver a quarter percentage point interest rate cut for the third time this year.

At 11:16 a.m. ET the Dow Jones Industrial Average () was up 42.78 points, or 0.16%, at 27,133.50, the S&P 500 () was up 5.13 points, or 0.17%, at 3,044.55 and the Nasdaq Composite () was down 30.91 points, or 0.37%, at 8,295.08.

Beyond Meat Inc (O:) dropped 18.6% as the vegan burger maker said it would need to offer more store discounts amid rising competition.

Shares of GrubHub Inc (N:) plunged 42.5% after the online food delivery company warned of slowing growth as customers opted to choose from a growing pool of rival providers.

General Motors Co (N:) gained 5.4% after its quarterly net profit topped estimates but the carmaker slashed its earnings forecast for 2019 as the 40-day U.S. labor strike by the United Auto Workers union brought virtually all of its North American operations to a standstill.

Advancing issues outnumbered decliners by a 1.15-to-1 ratio on the NYSE and for a 1.03-to-1 ratio on the Nasdaq.

The S&P index recorded 35 new 52-week highs and no new lows, while the Nasdaq recorded 69 new highs and 45 new lows.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Earnings Bonanza: Beyond Meat and Alphabet Get Ball Today; Apple, Facebook Lined Up

istock.com

istock.com

istock.com

Key Takeaways:

  • SPX futures indicate record high open as trade optimism grows
  • AT&T and Walgreens Boots Alliance both rise on earnings
  • Beyond Meat and Alphabet both report after the close

An epic week begins on Wall Street today. Earnings from around 150 of the S&P 500 companies are only the start. There’s also a Fed meeting, payrolls data, and a new read on the U.S. manufacturing picture.

It starts Monday as one of the market’s most closely watched names reports earnings after the close. Beyond Meat (BYND) looms this afternoon, along with results from a much more established player, Alphabet (GOOGL).

The week kicks off with major indices on the march and record highs threatened in the S&P 500 (SPX) partly because there’s optimism around the U.S./China trade picture. Asian and most European markets set the tone with gains earlier Monday. Another positive factor as the week starts is that earnings season continues to be good.

Later this week, investors get to hear from Apple (AAPL), Advanced Micro Devices (AMD), Exxon (XOM), and Facebook (FB), so plenty of big names remain in the wings. About 150 of the 500 S&P 500 names report this week, so it should give us a pretty good feel for what’s going on with corporate finances.

The average earnings outcome is a little better than expected and there’s even talk that when it’s all wrapped up, results could finish flat to down 1%, compared with initial thoughts that they’d fall 4%. That’s not necessarily something to go out and wake the neighbors about, but any gains between now and the end of earnings season might give people something to cheer.

Earnings strength last week came from Intel (INTC)—whose shares spiked 8% on Friday—along with Microsoft (MSFT), Visa (V), Tesla (TSLA), and Verizon (VZ). Some of the companies skipping the party included Caterpillar (CAT), Texas Instruments (TXN), and Amazon (AMZN).

Early Monday, both AT&T (T) and Walgreens Boots Alliance (WBA) saw gains after reporting earnings. WBA beat consensus views all around, but T came up a little short on revenue. The important thing with T was adding 101,000 new wireless customers.

The other thing that that appears to be helping drive the SPX toward new all-time highs is trade news. Wall Street appeared to like the headlines about the Office of the U.S. Trade Representative (USTR) being close to finalizing some sections of the “Phase One” deal with China. A decent October consumer sentiment report from the University of Michigan on Friday didn’t hurt, either.

Microsoft (MSFT) shares jumped 3% early Monday after the company received a huge Pentagon contract. That could help the Dow Jones Industrial Average ($DJI) in the early going.

Technology, Materials and Energy paved the way Friday, with some of the so-called “defensive” sectors in the back of the pack. It’s going to be interesting to see if this building cyclical strength can last during a week dominated by distractions like the Fed and payrolls.

Beyond Meat to Report after Tough Quarter for Stock

This afternoon brings results from BYND, whose stock has been all over the map this year. Shares trade at around $100, up sharply from the initial public offering (IPO) price of $25 a share and making the alternative-meat startup one of the best-performing IPOs of 2019.

That said, shares are down 58% from a peak of about $234 set in July. From $25 to $100 sounds good, but from $234 to $100 doesn’t sound so nice. It’s all a matter of perspective.

As far as the business is concerned, BYND appears on pace to report its first profitable quarter as a public company. Third-party consensus pegs earnings per share at $0.04 in Q3 on revenue of $82.2 million. Recent highlights—likely to be discussed on the earnings call—include new product placements at restaurants, including McDonald’s (MCD) and Yum! Brands (YUM) unit KFC. Also, BYND recently introduced its alternative-sausage at U.K. grocer Tesco, Barron’s noted.

Beyond that (pardon the expression), BYND has announced partnerships with Marriott International (MAR), Carl’s Jr., and Subway. So the company has definitely kept busy.

Still, the bloom could be off the rose, at least for now, when it comes to share price. Just over the last month, shares have fallen from nearly $150 to $100. If nothing else, this is a volatile stock, and likely to remain that way. It’s not one of those that you can just buy and forget about if you’re a long-term investor.

What makes BYND shares hard to count out is the interest millennials seem to have in the stock. It’s one of a bunch of names, including Uber (UBER) and Nvidia (NVDA), that this generation appears to love. Like most new things, it can be easy to get caught up in the excitement, and BYND is no exception. Sometimes investors confuse a company brand with its business. In other words, you may love the product, but that doesn’t necessarily mean you have to love the stock, too.

Big Week Ahead for Data and Interest Rates

Last week was almost all about earnings, but this week brings the ISM manufacturing data (more below) and payrolls, both Friday morning. We’ll talk more about jobs as the week advances, but at this point anything like the September report, which showed 136,000 jobs created and a slight slowdown in wage growth, would probably be seen as pretty benign.

Even a slightly lighter jobs number might not cause too much worry, because with the unemployment rate so low, it could signal that companies have already hired most of the people they need. The next question is where do wages go? It’s a complex picture and we’ll discuss it more in the coming days.

Before the jobs report comes the Fed decision Wednesday afternoon. It’s already pretty much baked in that there’ll be another 25-basis point rate cut, the third in a row. Futures at the CME Group start the week showing chances of that at 94.1%. What’s going to maybe matter more is what kind of message Fed Chairman Jerome Powell and the rest of the Federal Open Market Committee (FOMC) send.

Judging from the way Powell and company have talked lately, some analysts think it’s likely the message could be that FOMC members are keeping their options open and watching the data. However, if anyone injects a hawkish tone, it might get a fisheye from the market. Powell has made it very clear that he doesn’t consider rates to be on a predetermined path.

FIGURE 1: CHANGE OF TONE: The 10-year Treasury yield (TNX-candlestick) spent months under pressure and well under its 50-day moving average (blue line). Just recently, it’s started to show some strength, and now trades above the 50-day (which, to be fair, is much lower than it had been). Still, the recent move here might indicate improved economic optimism, so let’s see if it lasts through this very data-and-earnings-heavy week. Data Source: Cboe Global Markets. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

FIGURE 1: CHANGE OF TONE: The 10-year Treasury yield (TNX-candlestick) spent months under pressure … [+] and well under its 50-day moving average (blue line). Just recently, it’s started to show some strength, and now trades above the 50-day (which, to be fair, is much lower than it had been). Still, the recent move here might indicate improved economic optimism, so let’s see if it lasts through this very data-and-earnings-heavy week. Data Source: Cboe Global Markets. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

Data Source: Cboe Global Markets. Chart source: The thinkorswim® platform from TD Ameritrade.

Manufacturing Watch: We’re just a few days out from a report that last month really slammed the market: The ISM Manufacturing Index. It’s due this Friday morning. If you recall, last month’s reading on U.S. manufacturing health was the worst in a decade, driving fears that weakness in manufacturing might ultimately lead to a hesitant consumer. Last Thursday brought another sign of potential trouble as durable goods orders for September fell 1.1%. That was a bit worse than analysts had expected, with transportation the weakest category. One key takeaway from the report is that it indicated business spending remained weak, with a 0.5% decline in nondefense capital goods orders excluding aircraft, Briefing.com said. That followed a 0.6% decline in August.

We’ll learn more about business and consumer health Friday when the ISM data hits and the October payrolls report crosses the wire. With signs of manufacturing and orders flagging, the jobs report arguably becomes even more important. If wage growth starts to sputter, it could indicate the business issues are starting to have an impact on workers. On the plus side, weekly jobless claims stayed near recent low levels last week.

Yield Signs: Despite some weak housing and durable goods data last week, the U.S. Treasury market put in a decent showing. The benchmark 10-year yield ended Friday right at 1.8% (see figure 1 above). That’s about 15 basis points above the 50-day moving average of 1.65%, and also well above short-term Treasury yields. This strength could be a sign of investors reacting to better than expected earnings, some analysts believe, or it could reflect hopes for a trade deal. One geopolitical worry that just won’t seem to go away is Brexit, but that keeps getting kicked down the road. The interesting thing will be seeing how the 10-year yield reacts to the Fed decision this week, followed by ISM and jobs data.

Alphabet Ad Revenue in Focus: When Alphabet (GOOGL) reports this afternoon, investors are likely to be looking closely at revenue—ad revenue in particular. Last time out, the company reported better than expected overall revenue and shares rallied. It was the opposite case the time before that, when failure to meet analysts’ ad revenue estimates sent shares down sharply. Aside from that, one thing that could possibly stand in the way of another solid quarter is the greenback. The company’s chief financial officer set expectations last quarter that GOOGL continues to face foreign exchange headwinds, and there’s no reason to think that’s changed, even though the dollar has retreated a bit over the last week or two. Stay tuned.

TD Ameritrade® commentary for educational purposes only. Member SIPC.