U.S. equities finished higher to start the week, adding to last Friday’s rally and notching new record highs along the way, amid continued optimism on the U.S.-China trade front, as well as eased concerns about Q3 earnings season. However, Dow member McDonald’s saw some pressure after it fired its CEO, and Under Armour suffered amid reports of an accounting probe by federal regulators. In M&A news, Stryker Corporation announced an agreement to acquire Wright Medical Group for about $4.0 billion. Treasury yields and the U.S. dollar were higher amid a light economic calendar that showed factory orders declined more than expected, while crude oil prices rose and gold fell.
The Dow Jones Industrial Average (DJIA) rose 115 points (0.4%) to 27,462, the S&P 500 Index increased 11 points (0.4%) to 3,078 and the Nasdaq Composite advanced 47 points (0.6%) to 8,433. In heavy volume, 949 million shares were traded on the NYSE and 2.1 billion shares changed hands on the Nasdaq. WTI crude oil added $0.34 to $56.54 per barrel and wholesale gasoline was unchanged at $1.66 per gallon. Elsewhere, the Bloomberg gold spot price was $5.46 lower at $1,508.88 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies— gained 0.3% to 97.54.
Factory orders fell 0.6% month-over-month (m/m) in September, versus the Bloomberg expectation of a 0.5% decline, and compared to August’s unrevised 0.1% dip. Stripping out the volatile transportation component, orders nudged 0.1% lower, versus August’s negatively-adjusted 0.2% decrease. Final durable goods orders preliminarily reported two weeks ago, were revised lower to a 1.2% m/m decline for September, and orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, were revised down to a 0.6% decrease.
The markets continue to digest a better-than-feared Q3 earnings season as well as growing optimism of a “phase one” trade agreement between the U.S. and China, that have contributed to a return to all-time highs for the stock markets, while the Fed delivered its third rate cut of the year last week.
Treasuries were lower, as the yield on the 2-year note rose 2 basis points (bps) to 1.58%, while the yields on the 10-year note and the 30-year bond advanced 5 bps to 1.78% and 2.26%, respectively.
©2019 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.