Stocks Tick Higher On Positive Trade Talk

Daily Market Comment

October 21, 2019

Stocks Tick Higher On Positive Trade Talk

Global markets moved higher to start the week after China’s Vice Premier commented over the weekend that the US and China were making ‘substantial progress’ in trade talks. The major averages ticked higher at the open and finished near the highs of the day. The gains were led by Energy (XLE), Financials (XLF) and Technology (XLK) while only Materials (XLB) and Healthcare (XLV) closed red. The latter after several drug companies traded down after reaching a $260 million opioid settlement. The DJIA was the weak link today on selling in shares of Boeing (BA) after analysts downgraded the company on more allegations that employees knew of problems with the 737. The Dow managed to pick up 57.44 points (+0.21%) and finish at 26827.64, while the S&P 500 added 20.52 points (+0.69%) to 3006.72. The NASDAQ rallied on strength in semiconductors, gaining 73.44 points (+0.91%) and closing at 8162.99. The DJ Transportation Index and small cap Russell 2000 again outperformed which bodes well for the broader market going forward.

Breadth was bullish with advancing issues beating declining issues 2:1 on both the NYSE and the NASDAQ. Advancing volume was 66% on the NYSE and 67% of the NASDAQ. VIX eased 0.25 point (-1.75%) and finished at 14.00. Crude oil prices eased 0.27 (-0.50%) and the November contract closed at $53.51 a barrel. Gold lost 8.50 (-0.57%) and closed at $1485.60 an ounce.

Besides the optimistic view on trade, investors are hoping for a smooth Brexit deal. In addition, Q3 earnings continue to surprise to the upside. Tomorrow we get another heavy dose of earnings, but its hopes for continued progress in trade talks that will push the market to new highs. At the close, the CME Group FedWatch projected a 90% chance of a cut in rates at next week’s FOMC Meeting. That should keep a floor under prices.

Earnings releases to watch for on Tuesday include: Boyd Gaming (BYD), Chipotle Mexican Grill (CMG), Fifth Third Bancorp (FITB), Harley-Davidson (HOG), iRobot Corp (IRBT), Kimberly-Clark (KMB), McDonald’s Corp (MCD), Meritage Homes (MTG), Regions Financial (RF), Skechers USA (SKX), Texas Instruments (TXN), United Parcel Service (UPS) and United Technologies (UTX).

By David L. Blake, CMT

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Market Recap - 10/21/2019

Index Close Day Change Day % Change YTD % Change
NASDAQ COMPOSITE 8162.99 73.45 0.91% 23.02%
DJ UTILITIES 868.22 2.21 0.26% 21.78%
DJ TRANSPORT 10652.12 143.38 1.36% 16.15%
DJ INDUSTRIALS 26827.64 57.44 0.21% 15%
NYSE COMPOSITE 13088.62 81.97 0.63% 15.07%
S & P 100 INDEX 1331.59 9.98 0.76% 19.54%
RUSSELL 2000 1550.14 14.66 0.95% 14.94%
S&P 500 3006.72 20.52 0.69% 19.94%
CBOE MKT VOLATILITY 14.04 -0.21 -1.47% -44.83%
AMEX COMPOSITE 2459.81 19.51 0.8% 7.3%
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