U.S. equities added to last week’s rally following the weekend agreement at the G20 summit between the U.S. and China for a 90-day waiting period on further tariffs while the two parties look to solidify a trade deal. Energy issues gained ground amid a noticeable bounce in crude oil prices ahead of this week’s OPEC meeting, with hopes of a production cut high, and amid reports that Russia and Saudi Arabia extended a pact. In other economic news, manufacturing reports from across the globe and domestically were mostly positive, headlined by the ISM Manufacturing Index. Treasuries were mixed, gold finished higher, while the U.S. dollar lost ground. News on the equity front surrounded a number of M&A announcements.
The Dow Jones Industrial Average (DJIA) rose 288 points (1.1%) to 25,826, the S&P 500 Index gained 30 points (1.1%) to 2,790, and the NASDAQ Composite advanced 111 points (1.5%) to 7,442. In heavy volume, 985 million shares were traded on the NYSE and 2.6 billion shares changed hands on the NASDAQ. WTI crude oil jumped $2.02 to $52.95 per barrel and wholesale gasoline was up $0.03 at $1.43 per gallon. Elsewhere, the Bloomberg gold spot price was $9.96 higher at $1,230.48 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—lost 0.2% to 97.04.
The Institute for Supply Management (ISM) Manufacturing Index for November rose to 59.3 from the unrevised 57.7 in October, versus the Bloomberg forecast calling for a dip to 57.5, with a reading above 50 denoting expansion. The index suggested growth was stronger than expected as new orders jumped 4.7 points to 62.1, production ticked higher to 60.6 and employment rose 1.6 points to 58.4. Inventories gained 2.2 points to 52.9, order backlogs nudged higher to 56.4, and new export orders were flat at 52.2. However, supplier deliveries dipped to 62.5 and prices fell 10.9 points to 60.7. ISM said respondent comments reflected continued expanding business strength.
Construction spending dipped 0.1% month-over-month (m/m) in October, versus projections of a 0.4% increase, and following September’s downward revision to a 0.1% decline. Residential spending decreased 0.5% m/m, though non-residential spending ticked 0.1% higher.
Treasuries were mixed, as the yield on the 2-year note rose 4 basis points (bps) to 2.83%, the yield on the 10-year note was flat at 2.99%, and the 30-year bond rate lost 2 bps to 3.27%.
Crude oil prices also rebounded noticeably, bolstered by reports of an agreement between Russia and Saudi Arabia to extend a deal to manage the market into 2019, ahead of this week’s OPEC meeting, which is expected to deliver a production cut agreement. Today’s manufacturing data kicked off a heavy week on the economic front that will culminate on Friday with the November nonfarm payroll report, forecasted to show job growth remained solid and wages continued to grind higher.
©2018 Charles Schwab & Co., Inc., Member SIPC. All rights reserved.
Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.