Market Perspective for November 4, 2019

The Dow Jones Industrial Average joined the S&P 500 Index and Nasdaq at new all-time highs on Monday. The Nasdaq increased 0.56 percent, the Dow 0.42 percent and the S&P 500 Index 0.37 percent. Stocks rallied as Asian markets priced in strong U.S. employment data from Friday, as well as indications the U.S. and China were moving towards a “phase 2” agreement.

Crude oil rose only 0.62 percent on Monday, but energy stocks jumped. Exxon Mobil (XOM) and Chevron (CVX) climbed 3.00 percent and 4.62 percent, respectively. Independent producers were among the largest gainers in the S&P 500 Index, with several climbing more than 5 percent on the day. SPDR Energy (XLE) advanced 3.31 percent. Industrials were the second-best performing sector, with SPDR Industrials (XLI) increasing 1.18 percent.

Services PMIs will be out midweek. The Jobs Openings and Labor Turnover Survey (JOLTS) for September and the University of Michigan’s advance consumer sentiment survey for November will be other notable data releases.

The U.S. Dollar Index climbed 0.40 percent on Monday. iShares MSCI EAFE (EFA) and iShares Emerging Markets (EEM) increased 0.51 percent and 0.97 percent, thanks to optimism over Brexit and China-U.S. trade relations.

The 10-year Treasury yield hit 1.79 percent and has recovered almost all of its decline following the recent Fed meeting. Traders “bought the news” of the Fed rate cut after shorting bonds going into the meeting. Strong economic data and the Fed shifting its policy to a more neutral stance have begun lifting interest rates. Capital is also flowing out of bonds and into stocks after a choppy summer and early autumn.

Berkshire Hathaway (BRK.B) reported a 14 percent increase in operating earnings last quarter, but its net earnings per share fell because it had to mark down some of its holdings in other companies. The company had $128 billion in cash and short-term investments at the end of September.

Tuesday will see earnings from Allergan (AGN), Becton Dickinson (BDX), Regeneron Pharmaceuticals (REGN), Newmont Mining (NEM), Emerson Electric (EMR), Devon Energy (DVN), Tapestry (TPR) and HubSpot (HUBS).

Roku (ROKU), Fitbit (FIT), Square (SQ), Qualcomm (QCOM), CVS Health (CVS), Expedia (EXPE) and Wynn Resorts (WYNN) are among those reporting on Wednesday.

Disney (DIS) headlines Thursday’s earnings reports. Activision Blizzard (ATVI), Trade Desk (TTD), Monster Beverage (MNST), Johnson Controls (JCI), Air Products (APD), Cardinal Health (CAH), AmerisourceBergen (ABC) and Planet Fitness (PLNT) are other notable reports.

Duke Energy (DUK), Enbridge (ENB) and Honda Motor (HMC) close out the week.

 

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