U.S. stocks rise ahead of key trade meeting tomorrow
10-Oct-19 16:15 ET
Dow +150.66 at 26496.67, Nasdaq +47.04 at 7950.78, S&P +18.73 at 2938.17
briefing.com
[BRIEFING.COM] Wall Street ended Thursday on a positive note, as investors looked ahead to a supposed meeting between President Trump and China's Vice Premier, Liu He, tomorrow. The S&P 500 rose 0.6%, comparable to the gains in the Dow Jones Industrial Average (+0.6%), Nasdaq Composite (+0.6%), and Russell 2000 (+0.4%).
The session began on flat note, which was a noteworthy feat considering U.S. futures dropped over 1.0% last night on a negative-sounding report from China. That report indicated that no progress was made among deputy officials in Washington and that officials may leave talks early. The latter was edited later to reflect the planned two-day stay.
A tweet from President Trump in which he said he will meet with the Vice Premier at the White House on Friday quickly sent stocks higher and U.S. Treasuries even lower. Ten of the 11 S&P 500 sectors finished in positive territory, with the energy (+1.3%) and financial (+1.0%) sectors advancing the most. The utilities sector (-0.1%) was the lone holdout amid the higher Treasury yields.
The 2-yr yield (1.53%) and the 10-yr yield (1.66%), which both rose seven basis points, initially started to sell off after yr/yr changes in consumer prices reflected a firming of consumer inflation. The U.S. Dollar Index fell 0.4% to 98.69. WTI crude rose 1.8% (+$0.94) to $53.57/bbl.
Regarding a possible outcome of tomorrow's talks, several news outlets reported that a partial deal could include a currency pact and an agreement to prevent any tariff rate increases. This could help the earnings prospects of companies with exposure to China, namely those within the materials (+1.0%), industrials (+0.9%), and information technology (+0.6%) sectors.
Corporate news was largely overshadowed by the influx of trade headlines.
Notable large-cap movers included Cisco Systems (CSCO 46.15, -0.69, -1.5%), Netflix (NFLX 280.48, +12.95, +4.8%), and Delta Air Lines (DAL 53.10, -0.82, -1.5%). Cisco was downgraded to Neutral from Buy at Goldman Sachs. Netflix brushed off two more analyst price cuts. Delta Air Lines guided Q4 EPS with a midpoint that was below expectations.
Outsized moves belonged to Bed Bath & Beyond (BBBY 12.09, +2.15, +21.6%) and PG&E (PCG 7.79, -3.19, -29.1%). Bed Bath & Beyond appointed former Target (TGT 110.57, +0.21, +0.2%) executive Mark Tritton as its President and CEO. In PG&E's case, a bankruptcy judge decided to allow other parties to put forth a Chapter 11 restructuring plan for the company.
Reviewing Thursday's economic data, which included the Consumer Price Index for September and the weekly Initial and Continuing Claims report:
- Total CPI was unchanged m/m in September (Briefing.com consensus +0.1%) while core CPI, which excludes food and energy, was up 0.1% (Briefing.com consensus +0.2%). That left the yr/yr changes at 1.7% and 2.4%, respectively, which were the same increases seen in August.
- The key takeaway from the report is that the yr/yr changes connote a firming of consumer inflation, which could give the Fed some possible cover to hold off on a rate cut in October.
- Initial claims for the week ending October 5 decreased by 10,000 to 210,000 (Briefing.com consensus 220,000). Continuing claims for the week ending Sept. 28 increased by 29,000 to 1.684 million.
- The key takeaway from this report was that the low level of initial claims connotes continuing firming in the labor market, which could give the Fed some possible cover to hold off on a rate in October.
Looking ahead, investors will receive the preliminary October reading for the University of Michigan's Index of Consumer Sentiment and Import and Export Prices for September on Friday.
- Nasdaq Composite +19.8% YTD
- S&P 500 +17.2% YTD
- Dow Jones Industrial Average +13.6% YTD
- Russell 2000 +10.1% YTD
Market Snapshot
| Dow | 26496.67 | +150.66 | (0.57%) | | Nasdaq | 7950.78 | +47.04 | (0.60%) | | SP 500 | 2938.17 | +18.73 | (0.64%) | | 10-yr Note | -29/32 | 1.667 |
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| | NYSE | Adv 1754 | Dec 1.8 bln | Vol 800.0 mln | | Nasdaq | Adv 1730 | Dec 1336 | Vol 1.8 bln |
Industry Watch
| Strong: Energy, Financials, Materials |
| | Weak: Utilities, Real Estate | |
