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Dow Jones Today: A Decent Day Despite McDonald’s Controversy

Todd Shriber

Domestic equities rallied to record highs again Monday despite some controversy at McDonald’s (NYSE:MCD), one of the largest members of the Dow Jones Industrial Average.

Dow Jones Today: A Decent Day Despite McDonald's Controversy

Source: Venturelli Luca / Shutterstock.com

On the heels of last Friday’s better-than-expected October jobs report, stocks extended those gains today thanks to some encouraging signs pertaining to the U.S.-China trade saga. While the trade talks between the worlds two largest economies and the related headlines have frequently moved back and forth between positive and negative, things appear to be headed in the right direction.

There’s chatter that Phase 1 of a trade deal between the two sides could be signed sometime this month. Perhaps more importantly, particularly for investors with significant technology sector exposure, United States Secretary of Commerce Wilbur Ross said Sunday that licenses for American tech companies looking to restart selling products to Huawei Technologies could soon be on the way.

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That was enough to send the Nasdaq Composite higher by 0.56%, while the S&P 500 added 0.37%. The Dow Jones rose 0.42% today with 19 of its 30 members higher in late in Monday’s session.

Burgers, Fries And Controversy

McDonald’s, which has been one of the Dow’s best-performing names this year, was a problem for the blue-chip index, tumbling 2.7% after news broke Sunday that the board of the world’s largest fast food chain ousted CEO Steve Easterbrook due to an allegedly consensual relationship with a female employee.

In an email to McDonald’s staffers, Easterbrook acknowledged the relationship and that he was in the wrong, saying “I agree with the board that it is time for me to move on.”

For now, what happened at McDonald’s doesn’t appear to be comparable to the 2018 controversy at Wynn Resorts (NASDAQ:WYNN), one that contained scores of lurid details. However, McDonald’s policy forbids executives from carrying on romantic relationships with subordinates. Global Chief People Officer David Fairhurst, head of McDonald’s human resources department, also resigned in the aftermath of the Easterbrook news.

MCD stock entered Monday as the fifth-largest component in the Dow Jones Industrial Average at a weight of almost 5%.

Surprisingly, McDonald’s was not the worst-performing member of the Dow today. That dubious distinction belongs to Procter & Gamble (NYSE:PG), which slid nearly 4%. Interestingly, Chris Kempczinski, who is replacing Easterbrook at the helm of McDonald’s, started his career at P&G, though that connection likely had no impact on the consumer products giant’s Monday slump.

Boeing’s Back

Although it’s not all the way back in terms of price action, Boeing (NYSE:BA) is making a comeback int he Dow Jones news today. Shares of the aerospace giant and the largest member of the Dow gained 1.7%, making it one of the Dow’s better performers.

Today’s price action in Boeing is impressive, especially if you consider analyst comments about a possible supply glut in passenger jets when Boeing is able to get the 737 MAX back in the skies. The company has continued manufacturing the 737 MAX even though it has been grounded.

“Next year is the challenge. When the dam breaks and the MAX starts to flow, there are going to be a lot of aircraft,” said Rob Morris, global head of consultancy at U.K.-based Ascend by Cirium.

Building Momentum

Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), which reported third-quarter results last Friday, were two of three top performers in the Dow today as oil prices were supported by the U.S.-China trade news, among other factors.

“Along with a better-than-expected jobs report from the U.S. on Friday, those factors have combined to help lift the hope that demand for crude oil will remain healthy, amid signs of slack in economic expansion outside of the U.S.,” according to MarketWatch.

Bottom Line on the Dow Jones Today

Stocks continue defying skeptical prognostications and, at this point, it’s hard to bet against a rally into year end. Plus, plenty of market observers likely need to boost their year end price forecasts for the S&P 500, which could be a positive catalyst.

“Of the 17 forecasters that CNBC tracks for S&P 500 price, just three have targets that are above where the broad-market index traded Monday. The median 3,000 target is 2.7% below mid-day levels with still nearly two months left to the year,” reports CNBC.

As of this writing, Todd Shriber did not hold a position in any of the aforementioned securities.

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