Market Snapshot: Dow, S&P 500 rise as Nike, consumer-discretionary shares climb

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U.S. stock-index benchmarks rose slightly early Monday as a series of deals highlighted optimism about U.S. economic health and investors remained upbeat that progress would be made toward resolving contentious trade disputes between the U.S. and China.

What are the major markets doing?

The Dow Jones Industrial Average DJIA, +0.34%  rose by about 90 points to 25,761, a gain of 0.4%, led by a component Nike Inc. NKE, +2.11%

The S&P 500 index SPX, +0.13% was up 6 points to 2,856, a gain of 0.2%. However, the Nasdaq Composite Index COMP, -0.18% lagged behind its equity benchmark peers after opening higher, most recently, off 7 points, or 0.1%, to 7,806.

U.S. equities rose sharply last week, on signs of improving trade relations, as well as signs of stabilization in Turkey’s currency market. The Dow Jones Industrial Average jumped 1.4%, a move that took it to its highest close since February. The S&P 500 added 0.6% and is within 1% of its record. The Nasdaq Composite Index dipped 0.3% over the course of last week, but it is also within striking distance of its record.

What factors are driving markets?

With the second-quarter earnings season largely over, trading may continue to be driven by shifting geopolitical factors. Trade will likely remain a key focus for investors, with any sign of improving or deteriorating relations between the U.S. and China driving a corresponding move in investor sentiment.

The latest trade development gave some room for optimism. The Wall Street Journal reported Friday that negotiators from the U.S. and China were mapping out talks with the aim of resolving the trade dispute by November. Such an outcome would remove a huge overhang of uncertainty over the markets. The news spurred big gains in Asian markets.

However, this week will also see the imposition of 25% tariffs on $16 billion worth of Chinese imports, an action by the Trump administration that China has said it would retaliate against.

Investors are also continuing to pay close attention to troubled regions like Turkey, where the lira and stock market have tumbled amid high inflation, political instability, and debt, and Italy, which is struggling under a debt burden of its own. While U.S. companies have limited direct exposure to either country, there are concerns that the weakness could spread into other regions or signal a broader downturn in economic growth.

On Friday, both S&P Global Ratings and Moody’s Investors Service downgraded their view on Turkey’s sovereign credit. On Sunday, The Wall Street Journal reported that the Trump administration rejected an effort by Turkey to tie the release of a U.S. pastor with relief for a major Turkish bank facing billions of dollars in U.S. fines, telling Ankara other issues are off the table until the minister is freed.

Opinion: If turmoil spreads in Europe, expect heavy flows into U.S. stocks

Looking ahead, Wednesday will see the release of minutes from the Federal Reserve’s most recent meeting, which could provide insight into the central bank’s thinking in terms of policy changes.

What are market experts saying?

Rick Bensignor, president of Bensignor Strategies, said the uptrend in stocks was showing signs of “exhaustion,” although “we’re not opposed to putting on new long exposure if you understand and accept that the risk to make money on that capital is as high as its been in over 30 years.”

He added that historically speaking, this week tends to be quiet in terms of trading volume, as there is limited news from corporate earnings or economic data. “Thus, expect lower volumes and potentially exaggerated moves” as a result of the reduced liquidity, he said.

What stocks are in focus?

PepsiCo Inc. PEP, +0.58%  said it would buy SodaStream International Ltd SODA, +9.71%  for $3.2 billion, a value that implies a 11% premium to SodaStream’s Friday closing price. Shares of Pepsi were up 0.5%, while SodaStream shares jumped nearly 10%.

Tyson Foods TSN, -0.13%  said it would buy Keystone Foods for $2.16 billion in cash. Shares of Tyson added 0.2%.

Tesla Inc. TSLA, -2.38%  fell 3.6% after JPMorgan slashed its price target on the electric-car company, dropping it to $195 from $308, arguing it was unlikely the company would be taken private, as Chief Executive Officer Elon Musk recently—and unexpectedly—tweeted that he was attempting to do.

Separately, it was reported that PIF, Saudi Arabia’s sovereign-wealth fund, was in talks to invest in Lucid Motors Inc., a Tesla rival. Musk has reportedly been hoping an investment from PIF could aid in his taking Tesla private.

Estée Lauder Cos. EL, +3.21%  reported adjusted fourth-quarter earnings that beat expectations, it also reported revenue that grew more than had been forecast. Shares of the company rose 3.8%.

Lannett Co. Inc. LCI, -56.67%  plummeted 55% after it said its distribution agreement with Jerome Stevens Pharma wouldn’t be renewed. It also gave a fourth-quarter outlook that was below expectations.

Roche Holding AG’s RHHBY, +1.01% Alecensa cancer drug has been granted marketing authorization in China. Shares of the company were up about 1%.

ConocoPhillips COP, +0.95%  reached a $2 billion settlement with Venezuelan state-owned oil giant PdVSA on an arbitral tribunal convened under the rules of the International Chamber of Commerce. ConocoPhillips’s stock added 0.7%.

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