United States stocks close higher on energy, tech gains

Andrew Cummings
November 7, 2019

"The lion's share of the numbers have come in already and we have had enough reports to suggest that this was a solid earnings season", Frederick said.

The Dow Jones Industrial Average added to its record high Tuesday on a positive report from the services sector index and hopes for the initial phase of a trade deal with China. Benchmarks in Taiwan and New Zealand declined while Singapore advanced.

In May, Huawei, the world's largest telecoms equipment provider, was put under a United States blacklist citing national security concerns.

On Monday, Piper Jaffray downgraded the stock to Neutral from Overweight on fears that the departure of Easterbrook might put more burden on shares.

The government also said last week that the nation's gross domestic product, the broadest gauge of economic growth, expanded at a 1.9% annual rate in the July-September quarter. A gauge for US services activities topped expectations for October, while the labor market remains solid as jobs creation easily beat estimate last month. It suggested that the economy remains resilient. Trade war doves might be pleased to hear that the Trump administration is considering the request and may roll back tariffs on $112 billion worth of China-produced consumer goods, which have been subject to a 15% levy since September 1.

Upbeat comments by U.S. Commerce Secretary Wilbur Ross about progress in trade talks with China has helped to raise sentiment. The two sides have moved toward a potential first-stage deal that probably would lead to the cancellation of further tariffs that President Donald Trump has threatened to impose and possibly to the lifting of some existing tariffs. Yet that concern was postponed after the European Union agreed last month to delay a deadline for the U.K.'s departure from October 31 to January 31 amid signs that a Brexit agreement might be reached. That would provide another source of growth for the US economy, in addition to the consumer spending that has almost alone driven the expansion for the past six months. The central bank last week cut interest rates for the third time this year but signaled that it would not reduce them further unless the economy sharply slowed.

Shares of software company Adobe rose 3.7% after the company late Monday raised its fourth-quarter revenue target for its digital media segment.

The 10-year U.S. Treasury note lost 29/32, pushing the yield up to 1.859%.

BANKING ON PROFITS: The widening gap in yields helps banks, which make money by borrowing money at short-term rates and lending it out at longer-term rates while pocketing the difference.

The 10-year U.S. Treasury barely yielded 1.5% in early October. Investors are now paying around $18.90 per $1 of future earnings in the S&P 500, something known as a price-to-earnings ratio.

U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 69 cents to settle at $57.23 a barrel.

At 10:31 a.m. ET the Dow Jones Industrial Average was up 23.02 points or 0.08% at 27,485.13; the S&P 500 was down 3.67 points or 0.12% at 3,074.60; and the Nasdaq Composite was down 3.15 points or 0.04% at 8,430.06. Wholesale gasoline rose 1 cent to $1.67 per gallon. Bank of America climbed 2.1 percent, and Citigroup added 1.7 percent. Natural gas rose 11 cents to $2.82 per 1,000 cubic feet.

Wall Street had a massive rally on Friday with the 30-stock index closing up 301.13 points to 27,347.36, fueled by better-than-anticipated jobs data.

The dollar rose to 108.77 Japanese yen from 108.59 yen on Monday. The euro gained to $1.1081 from $1.1077.

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