After The Close - The stock market started positively today, as a few companies agreed to mergers and acquisitions over the weekend. These included Charles Schwab (SCHW) announcing plans to purchase TD Ameritrade (AMTD) in an all-stock transaction, while Novartis (NVS) agreed to buy The Medicines Co. (MDCO) in an all-cash deal. Additionally, China released new guidelines for the protection of intellectual property, which has been a significant sticking point in U.S. trade negotiations. These factors bolstered sentiment, and the Dow Jones Industrial Average jumped as many as 153 points in early action. Too, the S&P 500 and NASDAQ rose and reached all-time highs. The market then traded in a sideways fashion for the vast majority of the day, though the indices closed not too far off their trading apexes. All told, the Dow closed higher by 191 points, the S&P 500 was up 23 points, and the NASDAQ rose 113 points.
Moreover, market breadth was very positive, as advancers outpaced decliners by a 2.8-to-1.0 ratio. Technology stocks were among the best performers on the day, while utility equities were among the weakest, despite a slide in interest rates.
In commodity news, oil prices rose today, as sentiment for future demand improved. Meantime, U.S. Treasury bond yields were lower—across the board today, and long-term interest rates fell more than short-term yields, which usually is a negative for financials. The VIX Volatility Indicator was lower today, as demand for options protection fell.
Looking ahead, tomorrow will mark the release of some economic data, including consumer confidence for November and new-home sales for October. Additionally, several companies will report quarterly results, both after the closing bell today and before the open tomorrow. Too, we think trading tomorrow will be driven by any changes in sentiment regarding U.S. trade negotiations with China. - John E. Seibert III
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell - Investors head into the holiday-shortened Thanksgiving week in a relatively upbeat mood.
Truthfully, there are things to be thankful for with stocks near record highs and the economy holding up well more than ten years into a business expansion.
Friday’s market action, which saw the Dow Jones Industrial Average climb 109 points, was supported by a pickup in the composite purchasing managers’ index for the U.S. in November, as compiled by data gatherer IHS Markit.
Ongoing optimism about some sort of trade deal between the United States and China, as well as the feeling that the Federal Reserve will provide stimulus as needed, are also underpinning sentiment these days.
To be sure, not everything is coming up roses, as the recent indication that U.S. industrial production dropped by the biggest amount in nearly 18 months showed. The global outlook for GDP expansion also remains less-than-compelling. Even so, the bears have not been able to build a strong case to topple the bullish run in the stock market this year.
This week, Wall Street will be reviewing fresh data on consumer confidence and new-home sales on Tuesday, and a report on durable-goods orders is due out on Wednesday. An updated estimate for third-quarter GDP will also be published Wednesday. Little change is expected versus the preliminary 1.9% rate of expansion. Safe to say, any notable deviation from expected results in this week’s data could affect the tone of trading.
As for this morning, it is shaping up as a classic “merger Monday” with a few deals of note. Brokerage firm Charles Schwab (SCHW) is buying TD Ameritrade (AMTD) for $26 billion in stock. The move is the logical next step after a number of online brokerages eliminated commissions.
Among retailers, European conglomerate LVMH has offered to purchase Tiffany & Co. (TIF) in a cash transaction valued at $135 a share. The combination has the makings of an excellent fit, given the LVMH’s focus on luxury, and Tiffany’s long-standing share in that market. The deal is valued at around $16 billion.
Elsewhere, Novartis (NVS) will pay nearly $10.0 billion in cash to bring cholesterol-drugmaker Medicines Co. (MDCO) into the fold. Novartis is looking to expand in the promising heart-treatment medications business.
Less than a half hour before the start of trading, stock futures are trending modestly higher. - Robert Mitkowski