Stocks Stage Rebound Following October Sell-Off
The S&P 500 staged a rebound effort this week, tallying a 2.4% weekly gain. The continued expectation that the market was due for a bounce-back after last month's sell-off, compounded with mostly upbeat earnings and easing trade tensions underpinned the rally. As for the other major averages, the blue-chip Dow Jones Industrial Average gained 2.4%, the tech-sensitive Nasdaq Composite gained 2.7%, and the small-cap Russell 2000 gained 4.3%.
Cyclical sectors were largely the best-performing groups this week, with the lightly-weighted materials sector (+6.1%) and the heavily-weighted financials (+4.4%) sectors leading the advance. The consumer discretionary sector (+4.0%) also had a notable gain. On the downside, utilities was the only group to settle in the red, losing 0.6%.
U.S.-China trade tensions eased this week, with U.S. President Trump saying that he had a "long and very good conversation" with China's President Xi, adding that the two leaders will be getting together at the upcoming G-20 summit in Argentina. There were some conflicting reports as to whether Mr. Trump has asked his cabinet to begin drafting a trade deal, but the president did say he thinks a deal will eventually be reached.
On the earnings front, Facebook's (FB) third quarter report was "good enough" to temper negativity surrounding the stock, helping to ease growth-related worries. Apple (AAPL), on the other hand, raised some red flags after forecasting softer-than-expected revenue guidance for the holiday quarter and announcing that it will no longer provide unit-sales data for the iPhone, iPad, and Mac.
Other notable companies to report earnings this week included Pfizer (PFE), Coca-Cola (KO), Chevron (CVX), Exxon Mobil (XOM), General Motors (GM), eBay (EBAY), T-Mobile US (TMUS), DowDuPont (DWDP), and Starbucks (SBUX), all of which beat estimates. Conversely, results from General Electric (GE), Kellogg (K), Spotify (SPOT), and Wayfair (W) came in below consensus.
In M&A news, IBM (IBM) acquired Red Hat (RHT) over the weekend for an all-cash offer of $190 per share; that represents a 63% premium over Red Hat's October 26 closing price.
Macro :
- Volatility Remains Elevated Ahead of U.S. Elections: Goldman
- Investors Expect No Relief on the Other Side of U.S. Midterms
- Trump-Xi Trade Deal Is Likely to Begin Rather Than End at G-20
- Salvini’s Surge Renews Turmoil in Italy’s Populist Government
- May Secures Key EU Brexit Concessions on Customs, Times Says (3)
Keep an eye on :
- AIBG ID : AIB Says No Capital Action Required After Stress-Test Results
- ALO FP : Alstom, Hyundai Make Joint Bid to Build $2.5b Baghdad Railway
- BAMI IM : Banco BPM Says Stress Test Didn’t Factor in Ongoing Derisking
- BIRG ID : Bank of Ireland Says Capital Position ‘Strong’ After Stress Test
- BARC LN : Barclays Remains Comfortable With Its Target CET1 Ratio
- BRK/A US : Berkshire Third Quarter Operating Income $6.88 Bln
- BRK/A US : Berkshire Profit Surges as Buffett’s Insurers Weather Storms
- ACA FP : Credit Agricole Says Stress Test Shows Group Is ‘Very Robust’
- CNHI IM : October Class 8 Truck Net Orders Rose 21% Y/y, ACT Research Says
- DANSKE DC : Danske Is Worst-Hit Nordic Bank in EBA Capital Stress Test
- DBK GY : Deutsche Bank Eyes Later Role in EU Banking Consolidation: HB
- DIE BB : Belgian Oct. Car Registrations Slide 15%; D’Ieteren Has 17.6%
- DWS GY : Deutsche Bank’s DWS Acquires 15% Stake in Neo Mena Technologies
- DTE GY : *T-MOBILE: THOMAS DANNENFELDT TO RESIGN FROM BOARD
- DUFN SW : Dufry: Holzer Neumann to Temporarily Renounce Board Functions
- EMI IM : ENI CEO Confirms Company Has ’Strong Commitment’ to Libya
- FCA IM : Fiat Chrysler Italy Sales Down 17% in October, Mkt Down 7.4%
- GAM SW : *GAM REBUFFS SCHRODERS APPROACH FOR HEDGE FUND UNIT: FT
- GS US : Goldman May See Significant Fines From U.S. 1MDB Proceedings
- HSBA LN : HSBC Sees CET1 Ratio of 9.18% at the End of 2020
- ING NA : ING CET1 Ratio Drops to 10.7% in Adverse Scenario: EBA test
- ISP iM : Intesa Sanpaolo CET1 Fully Loaded Under Adverse Scenario 9.66%
- IG IM : Ascopiave May Discuss Partnership With Italgas, Sole Says
- MC FP : Billionaire, the restaurant chain owned by Italian entrepreneur Flavio Briatore, has attracted the interest of French luxury goods group
- MKS LN : Marks & Spencer board considered break-up, decides against
- NOVN SW : Sandoz Decides Not to Pursue US Biosimilar Rituximab
- NKT DC : NKT Confirms Turnkey Order for Moray East Offshore Wind Project
- SAB SM : Sabadell Says EBA Stress Results Affected by TSB Acquisition
- UBI IM : Ubi Banca Says EBA Stress Tests Show Group’s Good Resilience
- UCG IM : UniCredit CET1 at Adverse Scenario 9.34%
- VOW3 GY : VW Financial Services to Maintain Last Year’s Op Profit: BZ
- VOW3 GY : VW Seeks to Link With Rivals on Driverless, Electric Cars: Rtrs
- W US : Citron Research Urges Shorting Wayfair on ‘False Promises’
- WPP LN : WPP Is Said to Freeze Hiring Until Early 2019 as Growth Falters