Dow’s rises toward record but gains capped by 100-point drag from Boeing’s stock
U.S. stock benchmarks opened modestly higher Monday, amid optimism over tariff talks and earnings, but a decline in shares of Boeing was capping gains in the blue-chip Dow index.
The Dow Jones Industrial Average DJIA, -0.01% edged 31 point, or 0.1%, higher at 26,801,
Boeing Co.’s stock BA, -4.25% was extending its decline to a two month low, down 4.4%, following a report on Friday that said that internal messages suggest the company misled federal aviation authorities about the safety of the 737 MAX jet. The drop was producing a roughly 100-point drag on the aviation and defense contractor.
The S&P 500 index SPX, +0.48% , meanwhile, advanced 15 points, or 0.5%, at 3,000.68, while the Nasdaq Composite Index COMP, +0.69% climbed 54 points, or 0.7%, to reach 8,143.
Last week, the Dow declined 0.2%, falling for four of the past five weeks, the S&P 500 index rose 0.5%, notching two consecutive weekly gains, while the Nasdaq Composite Index produced a weekly advance of 0.4% and has gained for three consecutive weeks.
The Dow stands 2.2% from its July 15 record finish, the S&P 500 is off 1.3% from its all-time closing high set on July 26, while the Nasdaq is off 2.9% from its July 26 record close, as of Friday’s finish.
China’s Vice Premier Liu He said Washington and Beijing have laid the groundwork for success in the first phase of its attempt to carve out a resolution to its trade disagreement. “China and the U.S. have made substantial progress in many aspects, and laid an important foundation for a phase one agreement,” said China’s top trade negotiator at a technology conference in Nanchang, Jiangxi, on Saturday, Bloomberg News reported (paywall).
Meanwhile, U.K. British Prime Minister Boris Johnson was forced to ask the European Union for a three-month extension to the Oct. 31 deadline to exit from the trade bloc, representing the latest setback for the British leader and the country’s yearslong attempt to forge an orderly separation.
Markets have been focused on the threat of Britain crashing out of the EU without a trade agreement, which some fear could disrupt global markets.
In corporate earnings, of the roughly 75 S&P 500 companies, 82.7% of them reported better-than-expected third-quarter results, while only 12% reported earnings that were below analysts’ expectations, according to Refinitiv. By comparison, the long-term average of outperformance since 1994 is 65% and 20% for cooler-than-expected results.
Some 130 S&P 500 companies, or a quarter of the index, are expected to report quarterly earnings this week.
“We expect a mixed to positive session as earnings continue to uplift investors sentiment even though Brexit situation is closely eyed,” said Peter Cardillo, chief market economist at Spartan Capital Securities in a research note.
Which stocks are in focus?
Shares of Halliburton Co.HAL, +5.67%rose 2.8% on Monday, after the oil-services company reported a third-quarter profit that was in line with expectations but revenue that fell below, amid lower pressure pumping activity and reduced drilling and wireline activity.
Shares of McDermott International Inc.MDR, -7.66% surged 22% at the open after the company announced an agreement on $1.7 billion in new financing. This comes amid reports that McDermott was in talks to restructure its balance sheet.
Teva Pharmaceutical Industries Ltd’s U.S.-listed stock TEVA, +1.73%rose 1.3% after several drug companies reached a settlement with two Ohio counties in opioid lawsuits, according to a report form The Wall Street Journal.
The 10-year Treasury note yield TMUBMUSD10Y, +1.40% gained 3.3 basis points to trade at 1.780%.
West Texas Intermediate crude for November delivery CLX19, -1.49% shed 23 cents, or 0.4%, at $53.55 a barrel on the New York Mercantile Exchange.
Gold for December delivery on Comex GCZ19, +0.03% rose by 60 cents, or less than 0.1%, at $1,494.70 an ounce.
The ICE U.S. dollar index DXY, -0.05%, which tracks the performance of the greenback against its major rivals, fell less than 0.1% to 97.187 on Monday.
Global stock-markets were also trading higher at the start of the week. The Stoxx Europe 600 SXXP, +0.66% as up more than 0.5% to 394.00. In Asia, Japan’s Topix index180460, +0.41% gained 0.4% and China’s CSI 300 index 000300, +0.30% finished up 0.3%.
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