Wednesday, 13 November, 2019


Dow closes at record high

Traders work on the floor at the New York Stock Exchange in New York US Nov. 4 2019. Brendan McDermid Reuters Traders work on the floor at the New York Stock Exchange in New York US Nov. 4 2019. Brendan McDermid Reuters
Conrad Doyle | 08 November, 2019, 15:40

Oil producers, banks and other stocks that do well when the economy is strengthening led the way.

Wall Street stocks surged to new record highs last night on optimism over global trade talks and continued positive momentum from solid economic data and earnings.

Technology companies and banks notched gains in the early going Monday.

"It's very clear we're seeing lots of celebration in the market, not just in stocks, but in emerging market assets such as the yuan and coming out of havens like the Japanese yen", said Jane Foley, head of foreign exchange strategy at Rabobank. The US Stock market is basking in risk-on sentiment derived from reports that Trump will begin unraveling tariffs on Chinese imports. When investors feel less need for safety, the crowd thins to buy Treasury bonds.

Bond prices fell. The yield on the 10-year Treasury rose to 1.84%.

Alan Skrainka, chief investment officer at Cornerstone Wealth Management, said investors are heartened that the United States and China have pulled back from threats of new additional tariffs.

The S&P 500 is up 571.42 points, or 22.8%. -China trade dispute, which have helped push the Dow Jones Industrial Average to a record high.

In New York, the Dow Jones industrial average was up 3.30 points at 27,495.93.

The Dow popped toward an all-time high for a second straight day.

The Nasdaq was up 0.6 percent and also on track for a record.

The yield on the 10-year Treasury is now just 1.9%, down from 3.2% almost a year ago. The Russell 2000 index of smaller company stocks rose 0.4 percent.

BANKING ON PROFITS: The widening gap in yields helps banks, which make money by borrowing money at short-term rates and lending it out at longer-term rates while pocketing the difference.

The S&P 500 climbed 1.34 points or 0.04% to 3,079.61, while the Nasdaq ticked 8.06 points or 0.1% higher to 8,441.26. Bank of America rose 1 percent.

Energy and industrial stocks also led the pack.

Petroleum-linked shares had an especially positive session, with Dow members Exxon Mobil and Chevron and Halliburton all winning at least 3%. The contract rose 69 cents on Tuesday to close at $57.23.

With these uncertainties fading if not lifting, it's possible that USA companies will soon resume investing in machinery, computers and other equipment to expand their businesses. Investors instead have focused on defensive stocks that can do well even when the economy is turning sour or on companies that can grow nearly regardless of the economy, such as Amazon.com, Apple and other big technology companies. Utilities fell 1.3% - the largest loss among the sectors in the S&P 500.

HOW MUCH LONGER: Part of the reason for the shift into cyclical stocks may simply be the calendar. This data release gauges the health of the USA services sector, which accounts for around four-fifths of the overall USA economy. All three indexes closed at records Monday propelled by optimism over trade and a better-than-expected corporate earnings season.

The price of US crude oil rose 69 cents to settle at $57.23 a barrel. CVS will report its latest earnings on Wednesday and Walt Disney will report its latest results on Thursday.

The athletic apparel company's class A shares plunged 18.9% after it said it has been cooperating with federal regulators for two years on an investigation into its accounting practices.

But another Dow company, McDonald's, dropped 2.8% after the fast-food chain over the weekend ousted CEO Steve Easterbrook over a "consensual relationship" with an employee that violated company policy.

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