S&P 500, Nasdaq Poised for Records

日付 : 2019/10/29 @ 05 : 12
情報提供 : Dow Jones News
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S&P 500, Nasdaq Poised for Records

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2ヵ月 : から 10 2019 まで 12 2019

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By Avantika Chilkoti and Karen Langley 

The S&P 500 and Nasdaq Composite were poised to close at records for the first time in three months Monday, kicking off a busy week featuring a flurry of corporate earnings, a Federal Reserve meeting and the October jobs report.

Optimism about lower interest rates and hopes for a resolution to the long-simmering trade dispute between the U.S. and China have propelled stocks this year after a brutal selloff to end 2018. The S&P 500 is up 21% in 2019 -- though most of those gains came in the first quarter.

The broad stock-market index inched up 0.7% to 3042.32, setting a new intraday high. The Nasdaq Composite added 1.1%, putting the technology-heavy index on pace to close at the highest level ever. Shares of Apple, Microsoft and Google parent Alphabet were also on track for new highs.

The Dow Jones Industrial Average, meanwhile, gained 0.5% and is within 1% of July's high.

Major indexes have lately been stuck in a narrow trading range as signs of slowing global growth dented corporate investment and spurred anxiety among investors. A better-than-feared corporate earnings season has helped alleviate some of those worries.

"We think equities are quite attractive at current prices, given the low-interest-rate environment," said Dev Kantesaria, portfolio manager and founder of Valley Forge Capital Management. "We expect over the long term -- the next three years, five years -- for the S&P 500 to hit new highs."

Monday's gains were driven by the technology, health care and communication services sectors, while the real estate, utilities and consumer staples sectors lagged behind. Investors pointed to a resurgence of cyclical stocks, which are typically tied to the health of the U.S. economy, at the expense of co-called defensive stocks.

"I think the market had been pricing in that we were on the footsteps of a recession, and I think that's changed," said Michael Mullaney, director of global markets research at Boston Partners, who attributed the changed perspective in part to the Federal Reserve's shift to increasing its balance sheet, adding liquidity into financial markets.

Nearly 150 companies in the S&P 500, including General Motors, Facebook and Apple, are on tap to report results this week, and investors will be listening carefully for insight into how the trade war is affecting their businesses.

Most earnings reports from big companies have beaten the low expectations of analysts, but earnings are still on track to fall 3.8% from a year earlier, according to FactSet.

Investors are expecting the Federal Reserve on Wednesday to cut interest rates for the third time this year as the central bank attempts to insulate the economy against the effects of slower growth.

U.S. factory activity in September contracted for the second straight month and hit a 10-year low, and there have been signs that the manufacturing slowdown is spreading to the labor market and crimping consumer spending. Investors will be paying close attention to Friday's monthly jobs report for fresh clues on the health of the economy.

The yield on 10-year Treasurys rose to 1.853%, from 1.805% Friday, ahead of the anticipate rate cut.

The dispute between the U.S. and China has disrupted the global trade system, and stocks rallied late last week on reports that the two countries were edging closer to completing a "phase one deal." But investors have responded to a drip of both good and bad news on trade, and the possibility of another round of tariffs in December continues to fuel caution.

Fast-moving geopolitical events are holding back corporate performance, said Esty Dwek, a strategist at Natixis Investment Managers.

"It's a confirmation that there's a lot of uncertainty, and the more you can remove some of this uncertainty the more you'll have better guidance and confidence in terms of hiring and investing," Ms. Dwek said.

Corporate news drove swings in individual stocks Monday. Shares of Tiffany surged 30% after LVMH Moët Hennessy Louis Vuitton confirmed it is talks for a potential takeover that would value the iconic jewelry brand at $14.5 billion.

Microsoft gained 2.4% and was on track for a new high after the software company won a contract worth up to $10 billion over the next decade from the Pentagon. AT&T added 4.5% after the company struck a truce with an activist investor.

Shares of PG&E fell 22% amid mounting concerns about the bankrupt electric utility's potential liability related to the Kincade Fire burning in California.

In Europe, the pan-continental Stoxx Europe 600 index added 0.2%. HSBC Holdings shed 3.7% after the bank dropped its main financial target and said it would speed up plans to revamp its U.K., U.S. and European businesses.

The U.K.'s FTSE 100 gauge ticked up 0.1% as U.K. Prime Minister Boris Johnson urged lawmakers to support his push for a Dec. 12 general election as a way to clear a path to Brexit. British lawmakers later blocked his plan for an early election. European Union leaders agreed to a three-month extension to the Brexit deadline, extending the political uncertainty until Jan. 31.

Asian markets had a stronger start to the week. The Shanghai Composite Index gained 0.9% and Hong Kong's benchmark Hang Seng Index climbed 0.8%.

Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com

 

(END) Dow Jones Newswires

October 28, 2019 15:57 ET (19:57 GMT)

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