Dow Gains 232 Points, and Stocks May Finally Be Cheap…if There's No Recession

Michael Haddad

Thanksgiving. Global markets seem happy to put October behind them. All three major U.S. stock indexes were trading higher following Wednesday’s rally, but there’s a long way to go before October’s damage is undone. U.S. investors are looking to see whether Apple’s results, due after the close, will assist with a turnaround. In today’s Intraday Update, we…

…marvel at the S&P 500’s valuation; …highlight the latest tweet from Tesla’s Elon Musk; …and explain why Teva is up more than 10%. What, Me Worry?

After a couple of hours of trading, it’s safe to say that November is looking a whole lot better than October—even if there’s not an obvious reason for the change of heart.

The S&P 500 had risen 0.8%, to 2734.45, at 11:31 a.m. on Thursday, while the Dow Jones Industrial Average had gained 232.05 points, or 0.9%, to 25,347.81. The Nasdaq Composite climbed 1.1%, to 7,386.77.

There’s nothing we can point to for the market’s climb. There were plenty of earnings, but with DowDuPont (ticker: DWDP) the most prominent, it’s probably safe to say they didn’t do much to shift sentiment. Today’s economic data was OK—productivity rose at a 2.2% annualized clip, above forecasts for 2%, while the ISM Manufacturing index dipped to 57.7, below forecasts for 58.9—but nothing to get excited about, one way or the other. It’s just a rally. “Three days of gains won’t wipe away October, but it’s good to see momentum again,” writes E*Trade’s Mike Loewengart.

But we have one idea: valuations. The S&P 500 is now trading at 15.7 times forward earnings, down from 18.2 times at the start of the year. That kind of decline is unusual outside recessions, observes Wells Fargo ’s Pravit Chintawongvanich. In fact, it has only

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