Dow closes above 28,000 amid continued trade optimism
15-Nov-19 16:25 ET
Dow +222.93 at 28004.80, Nasdaq +61.81 at 8540.83, S&P +23.83 at 3120.46
briefing.com
[BRIEFING.COM] The stock market rallied higher into record territory on Friday, with risk sentiment fueled by NEC Director Larry Kudlow saying the U.S. and China are close to reaching a Phase One trade agreement. The S&P 500 (+0.8%) closed above the 3100 level, and the Dow Jones Industrial Average (+0.8%) closed above 28,000 -- both for the first time.
The Nasdaq Composite (+0.7%) also closed at a record high, while the Russell 2000 (+0.5%) continued to trail its large-cap peers.
The S&P 500 health care sector did the heavy lifting on Friday, climbing 2.2%, even as the Trump administration announced an initiative to increase price transparency from hospitals and insurers. Investors were evidently unconcerned about the proposal leading to an adverse effect on earnings.
No other S&P 500 sector increased 1.0%, but the continued outperformance of Apple (AAPL 265.76, +3.12, +1.2%), Microsoft (MSFT 149.97, +1.91, +1.3%), and Alphabet (GOOG 1334.87, +23.41, +1.8%) should not be understated. The SPDR S&P Retail ETF (XRT 44.86, +0.44, +1.0%) and Philadelphia Semiconductor Index (+0.9%) also showed relative strength.
Retail stocks extended yesterday's advance after October retail sales increased 0.3% m/m (Briefing.com consensus +0.2%). Semiconductor stocks benefited from the trade news and the solid results and guidance from Applied Materials (AMAT 62.06, +5.10, +9.0%). Conservative guidance from NVIDIA (NVDA 204.19, -5.60, -2.7%) did limit gains, though.
Interestingly, the trade-sensitive materials sector (-0.1%) was the lone holdout on Friday.
Separately, T-Mobile US (TMUS 78.07, +1.23, +1.6%) CEO John Legere is no longer considering the CEO role at WeWork, according to CNBC. Shares of RH (RH 188.47, +13.25, +7.6%) and Occidental Petroleum (OXY 38.95, +1.19, +3.2%) outperformed after Warren Buffet's Berkshire Hathaway (BRK.B 219.74, +0.38, +0.2%) disclosed new positions in the companies.
U.S. Treasuries didn't sell off despite the risk-on mentality in the stock market, but they did edge lower. The 2-yr yield increased three basis points to 1.61%, and the 10-yr yield increased two basis points to 1.83%. The U.S. Dollar Index declined 0.2% to 97.99. WTI crude rose 0.9%, or $0.99, to $57.75/bbl.
Reviewing Friday's batch of economic data:
- October retail sales increased 0.3% m/m (Briefing.com consensus +0.2%) following an unrevised 0.3% decline in September. Excluding autos, retail sales jumped 0.2% (Briefing.com consensus +0.4%) after declining an unrevised 0.1% decline in September.
- The key takeaway from the report, other than it shows continued growth in discretionary spending, is that it will be a positive input for Q4 GDP. Core retail sales, which exclude autos, gasoline, building materials, and food services and drinking places sales, and which factor into the goods component of the PCE calculation, were up 0.3%.
- Import prices for October were down 0.5%. Excluding fuel, they were down 0.2%. Export prices were down 0.1%. Excluding agricultural products, they were down 0.3%.
- The key takeaway from the report is that it points to an indolent inflation backdrop.
- Industrial production slumped 0.8% in October (Briefing.com consensus -0.4%) on the heels of an upwardly revised 0.3% decline (from -0.4%) in September. The capacity utilization rate fell to 76.7% (Briefing.com consensus 77.1%) from 77.5% in September.
- The key takeaway from the report is that, while the GM strike had a big impact on industrial production, things were still weak excluding that impact. To wit, the Federal Reserve reports industrial production declined 0.5% excluding motor vehicles and parts.
- Total business inventories were unchanged month-over-month in September (Briefing.com consensus +0.1%) after a downwardly revised 0.1% decline (from 0.0%) in August. Total business sales were down 0.2% following a downwardly revised 0.1% increase (from 0.2%) in August.
- The key takeaway from the report is that the gap between inventory growth on a yr/yr basis (+3.7%) and sales growth (+0.5%) remains, which should help keep prices in check.
Looking ahead, investors will receive Net Long-Term TIC Flows for September on Monday.
- Nasdaq Composite +28.7% YTD
- S&P 500 +24.5% YTD
- Dow Jones Industrial Average +20.1% YTD
- Russell 2000 +18.4% YTD
Market Snapshot
| Dow | 28004.80 | +222.93 | (0.80%) | | Nasdaq | 8540.83 | +61.81 | (0.73%) | | SP 500 | 3120.46 | +23.83 | (0.77%) | | 10-yr Note | -1/32 | 1.833 |
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| | NYSE | Adv 1787 | Dec 1070 | Vol 859.0 mln | | Nasdaq | Adv 1860 | Dec 1223 | Vol 2.0 bln |
Industry Watch
| Strong: Health Care, Information Technology, Communication Services |
| | Weak: Materials, Consumer Staples |
Moving the Market
-- S&P 500, Dow, and Nasdaq close at record highs; Dow breaks 28,000 for the first time
-- NEC Director Larry Kudlow said a Phase One trade agreement is close to being reached
-- Applied Materials (AMAT) led the semiconductor space higher on solid results and guidance
-- Strength in the health care space
-- October retail sales rebounded slightly more than expected (0.3% actual vs 0.2% Briefing.com consensus)
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WTI crude gains nearly 2%
15-Nov-19 15:25 ET
Dow +190.26 at 27972.13, Nasdaq +44.06 at 8523.08, S&P +17.66 at 3114.29
[BRIEFING.COM] The S&P 500 (+0.6%) is on pace to close out the session above the 3100 level for the first time.
One last look inside the S&P 500 shows the health care sector (+2.3%) way out ahead of the industrials (+0.6%) and information technology (+0.5%) sectors. The materials (-0.3%) and consumer staples (-0.2%) sectors remain the lone sectors trading lower.
WTI crude settled up $0.99 (+1.7%) to $57.75/bbl amid the upbeat trade mood on Wall Street. |
