2ヵ月 : から 10 2019 まで 12 2019
By Karen Langley and Avantika Chilkoti
The S&P 500 set a record for the first time in three months to kick off a busy week that features 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 four months of the year.
The broad stock-market index inched up 16.87 points, or 0.6%, to 3039.42, a new record close. Technology stocks led the way as shares of Apple and Microsoft also set new highs.
The Nasdaq Composite added 82.87 points, or 1%, to 8325.99, its second-highest close in history. The Dow Jones Industrial Average, meanwhile, gained 132.66 points, or 0.5%, to 27090.72, leaving the blue-chip index 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.
"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.
The Fed is expected to cut interest rates Wednesday for the third time this year to insulate the economy against the effects of slower growth. Investors will be closely watching to see whether the central bank signals a timeout after that.
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. Friday's monthly jobs report is expected to offer fresh clues about the health of the economy.
"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."
The yield on 10-year Treasurys rose to 1.853%, from 1.805% Friday, ahead of the anticipated rate cut.
About 150 companies in the S&P 500, including General Motors, Facebook and Apple, are on tap to report quarterly 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.
Google parent Alphabet reported a smaller-than-expected profit and a slowdown in revenue growth after the market closed Monday, pushing the stock down about 2% in off-hours trading.
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 so-called defensive stocks.
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. Shares of Tiffany surged $31.17, or 32%, to $129.72 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 $3.46, or 2.5%, $144.19 after the software company won a contract worth up to $10 billion over the next decade from the Pentagon. AT&T added $1.58, or 4.3%, to $38.49 after the company struck a truce with an activist investor.
Shares of PG&E fell $1.20, or 24%, to $3.80 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%. The U.K.'s FTSE 100 gauge ticked up 0.1% as 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 17:07 ET (21:07 GMT)
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