Pushing Higher. All three main U.S. stock indexes closed higher on Monday, with the S&P 500 surpassing its previous July peak to set both an intraday high and its highest close yet. Investors continued to stay optimistic over a preliminary trade deal with China, while a no-deal Brexit is off the table for now after the European Union granted a three-month extension to the deadline. Despite the moderating uncertainties, a third rate cut is still widely expected from the Federal Reserve this week. In today’s After the Bell, we...
- check on the biggest movers in stocks today;
- wonder what the Fed’s monetary path will be like for the rest of 2019;
- and look into the results of the latest Big Money Poll from Barron’s.
Busy Day
Stocks ended Monday moderately higher, with strong undercurrents as some well-known names saw a sharp daily movements. The Dow Jones Industrial Average rose 132.66 points, or 0.49%, to close at 27,090.72. The S&P 500 added 16.87 points, or 0.56%, to finish at 3039.42 and the Nasdaq Composite grew 82.87 points, or 1.01%, to close at 8325.99.
Microsoft stock (ticker: MSFT) jumped after the software giant beat out Amazon.com (AMZN) for a cloud-computing contract valued at as much as $10 billion with the Defense Department. Spotify Technology stock (SPOT) climbed 16% after the music-streaming firm reported a surprise profit for the September quarter. Tiffany stock (TIF) soared after LVMH Moët Hennessy-Louis Vuitton (LVMUY) said it’s considering a possible takeover of the 182 year-old company, and Fitbit stock (FIT) surged after reports that Google-parent Alphabet (GOOG) has made an acquisition offer; shares of the two acquisition targets rose more than 30% on Monday. On the other hand, PG&E’s (PCG) stock continued to slide 24% on Monday as wildfires spread across California over the weekend.
So far, about 40% of S&P 500 companies have reported earnings for the September quarter, and roughly 80% of them have beat consensus expectations for earnings per share, better than the 74% one-year average. More than 150 S&P 500 companies are expected to report this week.
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The Federal Reserve is meeting this Tuesday and Wednesday and the bond market is largely expecting another 25-basis-points cut in the interest rate for the third time this year. But expectations for additional cuts in December remained low, possibly due to the moderating macro uncertainties regarding the no-deal Brexit and U.S.-China tariff spat.
On Monday, the European Union granted a three-month delay to Brexit until Jan. 31 next year—just three days before the current deadline of Oct. 31—ensuring that a no-deal departure of the U.K. from the bloc won’t be imminent. However, British Prime Minister Boris Johnson failed again on his third bid for a general election on Dec. 12 in seeking for a new parliament that could back the country’s withdrawn agreement with the EU. Still, in order to end the stalemate, two smaller anti-Brexit parties have said they would team up with Johnson to propose a law to hold an election on Dec. 9.
Nontheless, bearish sentiment in the U.S. has risen to the highest level in over two decades. According to Barron’s latest Big Money Poll conducted in fall 2019, only 27% of money managers said they are bullish about the market’s prospects for the next 12 months, down from 49% in the spring survey and 56% a year ago. That’s the lowest percentage of bulls in more than 20 years.
The Big Money pros see stock prices changing little through the middle of next year—the S&P 500 index will fall about 2% and the Nasdaq will relinquish under 5%, and the Dow industrials stay flat.
Write to Evie Liu at evie.liu@barrons.com
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October 29, 2019 at 05:21AM
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Dow Jones Industrial Average Rose as There’s Still Hope for a China Trade Deal - Barron's
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