Dow gained 164, advancers over decliners about 3-1 & NAZ went up 17. The MLP index added 2+ to the 253s & the REIT index gave back 4 to 342. Junk bond funds rose & Treasuries were a tad higher. Oil slid lower in the 65s & gold jumped up 19 to 1234.
AMJ (Alerian MLP Index tracking fund)
Traders cautiously begin the new month after a bruised and battered October
Pres Trump said that he spoke to Chinese Pres Xi Jinping amid concerns about escalating trade tensions between the world's 2 largest economies. In a tweet, the president said he had a “long and very good conversation” with the Chinese leader, “with a heavy emphasis on trade.” He added that “those discussions are moving along nicely” ahead of planned meetings at the G-20 summit in Argentina next month. It is unclear how much progress Trump & Xi made toward breaking an impasse over how they will assuage Trump's grievances with Beijing and move toward reducing tariffs. Talks between the 2 countries have recently stalled as the White House pushes for an end to alleged intellectual property theft by Chinese companies & a reduction in the US trade deficit with China. Despite the lack of detail on any concrete progress, stock markets jumped in response to Trump's tweet. Investors have worried about Trump's threats to levy tariffs on an additional $267B in Chinese goods & the damage the move could do to American consumers & companies. The duties would come on top of tariffs already imposed on $250B in Chinese imports. The tweet comes just 5 days before the midterm elections. Numerous candidates across the country, particularly those in areas that export agricultural products to China, have pushed for Trump to ease the trade tensions.
Trump says he and China's Xi exchanged 'long and very good' trade conversation
Manufacturing activity slips for second month; construction spending unchanged in September
Hope springs eternal for the bulls on hopes for new US-China trade talks with a positive outcome. That's still weeks away & they will involve resolving complicated issues. Stocks generally rally on the first day in a new month. It will be up to the bulls to extend today's enthusiasm.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 65.10 | -0.21 | -0.3% |
| GC=F | Gold | 1,231.20 | +16.20 | +1.3% |
Stocks opened modestly higher after a rollercoaster Oct in which all 3 major indices finished in the red. The
major averages, which had their worst October in 10 years, were on
track for a 3rd day of gains. The NAZ, coming off its
worst month since 2008, hasn't seen 3 consecutive winning
sessions since Aug, evidence of the extreme selling pressure that's
been hitting shares lately. Q3
earnings were dominating investors' attention. Stocks climbed yesterday, boosted by the latest earnings reports & economic data. The
Dow jumped 241 (1%)
to 25,115 & the S&P 500 rose 29 (1.1%) to
2711. The NAZ was up 144 (2%) at
7305. But the NAZ remained down 9.2% for Oct. The S&P 500 posted its
largest one-month drop in more than 7 years, off nearly 7% & the Dow's monthly drop was 5.1%, its largest such fall since
Jan 2016. Highflying technology stocks were among the most sharply
sold sectors in Oct. A handful of big names
posted their quarterly results on yesterday & a highlight was
General Motors (GM). The carmaker topped quarterly expectations on strong
truck & crossover sales. Traders also
digested the ADP payrolls report, which showed the US economy added
227K jobs versus the estimate for 189K. Tomorrow the gov
monthly jobs report will be released.
Traders cautiously begin the new month after a bruised and battered October
New applications for US unemployment aid fell
last week & the number of Americans receiving benefits was the lowest
in more than 45 years as labor market conditions tightened further. Initial
claims for state unemployment benefits dropped 2K to a seasonally
adjusted 214K, the Labor Dept said. Claims fell to 202K during
the week ended Sep 15, which was the lowest level since 1969. The forecast called for claims falling to 213K. The Labor Dept said claims for North Carolina continued to
be affected by Hurricane Florence, while Hurricane Michael impacted
those for Florida & Georgia. The 4-week
moving average of initial claims, considered a better measure of labor
market trends as it irons out week-to-week volatility, rose 1K to
213K last week. The claims data has no bearing on the Oct
employment report, which is scheduled for release tomorrow, as it falls
outside the survey period. Nonfarm payrolls probably rebounded by
190K jobs in Oct after Florence depressed restaurant & retail
payrolls in Sep. But the pick-up in job growth was likely tempered
by Michael, which struck the Florida Panhandle in mid-Oct. Payrolls increased by 134K in Sep, the
fewest in a year. The unemployment rate is forecast unchanged at a near
49-year low of 3.7% in Oct. The
labor market is viewed as being near or at full employment. There are a
record 7.14M open jobs in the economy, suggesting a shortage of
skilled workers. Tightening labor market conditions are pushing up
wages & a report on yesterday showed annual wage growth recorded its
biggest increase in 10 years in Q3. Today's
claims report also showed the number of people receiving benefits after
an initial week of aid declined 7K to 1.63M for the latest week, the lowest level since 1973. The 4-week moving
average of continuing claims decreased 6K to 1.64M , the lowest level since 1973.
US weekly jobless claims fall; continuing claims lowest since 1973
Pres Trump said that he spoke to Chinese Pres Xi Jinping amid concerns about escalating trade tensions between the world's 2 largest economies. In a tweet, the president said he had a “long and very good conversation” with the Chinese leader, “with a heavy emphasis on trade.” He added that “those discussions are moving along nicely” ahead of planned meetings at the G-20 summit in Argentina next month. It is unclear how much progress Trump & Xi made toward breaking an impasse over how they will assuage Trump's grievances with Beijing and move toward reducing tariffs. Talks between the 2 countries have recently stalled as the White House pushes for an end to alleged intellectual property theft by Chinese companies & a reduction in the US trade deficit with China. Despite the lack of detail on any concrete progress, stock markets jumped in response to Trump's tweet. Investors have worried about Trump's threats to levy tariffs on an additional $267B in Chinese goods & the damage the move could do to American consumers & companies. The duties would come on top of tariffs already imposed on $250B in Chinese imports. The tweet comes just 5 days before the midterm elections. Numerous candidates across the country, particularly those in areas that export agricultural products to China, have pushed for Trump to ease the trade tensions.
Trump says he and China's Xi exchanged 'long and very good' trade conversation
US manufacturing activity fell short of
expectations in Oct with a gauge of new orders easing to its lowest
level since Apr 2017. The Institute for Supply Management (ISM)
said its index of national factory activity dropped 2.1 percentage
points to 57.7 last month from 59.8 in Sep. A reading above 50
indicates growth in manufacturing, which accounts for about 12%
of the US economy. The forecast was for the ISM manufacturing index to hit 59 in
Oct. An index tracking new orders registered 57.4%, a
decrease of 4.4 percentage points from the Sep reading of 61.8%. “Demand remains moderately strong, with the New Orders
Index easing to below 60 percent for the first time since April 2017,
the Customers’ Inventories Index remaining low but improving, and the
Backlog of Orders Index remaining steady,” Timothy Fiore, Chair of the
ISM Manufacturing Business Survey Committee, said.
“Consumption softened, with production and employment continuing to
expand, but at lower levels compared to September.” Despite the moderation in the manufacturing
numbers, Oct marked the 114th consecutive month of overall economic
growth, according to the Manufacturing ISM report. The
latest read on the health of the manufacturing sector comes amid an
ongoing trade dispute between the US & China as a part of
Pres Trump's “America First” policy. The White House hopes
that it can pressure Beijing into a more favorable trade deal through
taxes on Chinese goods. The
pres escalated the economic spat in Sep, imposing tariffs on
an additional $200B worth of goods from China as of Sep 24.
The next wave of tariffs started at a 10% rate before climbing to
25% at the start of 2019 if the disagreement between the 2
nations is not resolved. The rift has not yet had a major impact on US economic activity, with the first read on Q3 GDP showing growth of 3.5%
on an annualized rate. The Commerce Dept said last month that
inflation has remained relatively tame & that consumer spending
surged.
Manufacturing activity slips for second month; construction spending unchanged in September
Hope springs eternal for the bulls on hopes for new US-China trade talks with a positive outcome. That's still weeks away & they will involve resolving complicated issues. Stocks generally rally on the first day in a new month. It will be up to the bulls to extend today's enthusiasm.
Dow Jones Industrials
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