|Day's Range||27,193.95 - 27,277.55|
|52 Week Range||21,712.53 - 27,398.68|
Stock are slightly higher Friday morning amid improving sentiment around U.S.-China trade relations, with the Dow Jones Industrial Average and S&P 500 on the brink of hitting all-time record highs.
(Bloomberg) -- Another rate cut from the Federal Reserve is all but certain. Its impact on the stock market, however, is the topic of frantic debate.In the bear camp are Bank of America Corp. and Morgan Stanley, whose strategists warned against relying too much on lower rates to boost stocks. In separate research, they reached the same conclusion after studying the historic relationship between Treasury yields and the S&P 500’s price-earnings ratios. That is, when rates go down too much, it hurts equity valuations.Ned Davis Research, on the other hand, offered a brighter assessment by focusing on a favorable market pattern following the second rate cut of a cycle, as is the case now.Getting it right has become an urgent matter for investors who have watched the S&P 500 rally 20% this year, with almost all the gains coming from an expansion in price multiples. Profits are barely growing, but stocks have rebounded from last year’s selloff after the Fed put a brake on rate hikes.Rate cuts can clearly bolster stocks in some circumstances. When they don’t is when the economy is in trouble -- and easy monetary policy almost always comes at times of trouble. When yields undercut a certain threshold, Morgan Stanley and BofA pointed out, equity multiples tend to shrink.“You can’t just depend on the Fed to lower interest rates to spur this bull market further,” Rich Weiss, chief investment officer of multi-asset strategies at American Century Investments in Mountain View, California, said by phone. “The fundamentals have to be there for additional highs on the stock market. They just aren’t there.”BofA and Morgan Stanley found different yield levels that historically switched from being good to bad for valuations. Savita Subramanian at BofA pointed to 10-year Treasury yields below 4%, compared with the current level around 1.9%. Mark Cabana, the firm’s rate strategist, said in a note earlier this month that the market expects the Fed to lower interest rates about five times by early 2021 and the likelihood for zero or negative interest rates is rising.“An ultra-low or negative rate environment is not necessarily supportive of stocks,” Subramanian wrote in a note last week. “The path to 0% would be accompanied by a significant deterioration in the growth outlook. That doesn’t bode well for P/E multiples.”Look at Germany, she suggested. Yields on the country’s 10-year bund have slipped to minus 0.7% from 4.9% since 2010. And price-earnings multiples for the stock market have been flat, hovering near 13.At Morgan Stanley, Mike Wilson examined real yields, the extra payment from 10-year Treasury above inflation. Currently, they sit in a range between minus 0.5% and zero, a place where further drops historically entail a decline in P/Es.“Falling rates are only a positive for equity valuations to a point,” said Wilson. “We’re passing the point.”Consider the last rate cut, he said. When the Fed lowered rates for the first time in a decade on July 31, the S&P 500 dropped 1.1% and then continued to decline the following month. At Friday’s close just above 3,000, the equity benchmark wasn’t far from the level seen the day before the rate move.But a second rate cut has tended to herald a more favorable reaction from stocks than the first, according to Ned Davis Research, which studied market performance and easing cycles in the past century.Perhaps it’s because doubts about the Fed’s commitment ease, or liquidity from the first one works through the system. Whatever the reason, the Dow Jones Industrial Average has jumped an average 9.7% three months after the second cut.“The good news for the bulls, from a historical perspective, is that a reduction next week would mean that a one-and-done cut is off the table,” Ed Clissold, chief U.S. strategist at Ned Davis, wrote in a note last week. “Two is better than one.”To Kevin Miller, chief investment office at E-Valuator Funds, the Fed’s influence on the U.S. market has weakened after Chairman Jerome Powell started considering global developments in policy making.“He doesn’t have to do something for the economy, but he does have to keep an eye on what’s happening globally and stay somewhere in line with where global rates are,” he said. “I don’t see a huge sell-off in the market if they lower by a quarter. Likewise, I don’t see a huge gain. It’s going to be more driven by what we’re hearing on a potential trade agreement” between the U.S. and China, he added.To contact the reporters on this story: Tatiana Darie in New York at firstname.lastname@example.org;Lu Wang in New York at email@example.comTo contact the editors responsible for this story: Jeremy Herron at firstname.lastname@example.org, Chris NagiFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
It’s a big week ahead for the markets. The FED, the BoE and Brexit are in focus, with stats and chatter on trade also needing some attention.
FIRE refers to the “financial independence, retire early” movement bubbling up in the younger generation these days as a pathway out of the grind — slash expenses, save a bundle and enjoy the freedom that approach ultimately allows. Using the name FluffayPenguin, one anonymous thirtysomething took to Reddit to illustrate his FIRE blueprint, which allowed him to graduate college in 2008 and build a small chunk of change all the way up to $930,000 in savings.
What’s left for the Federal Reserve to do at its rate-setting gathering next week now the U.S.’s main stock indexes are on the cusp of records again ?
It was a week when everything that had been working stopped working, when losers were suddenly winners. Value and small-cap stocks gained, while momentum stocks fell.
The iShares 20+ Year Treasury Bond exchange-traded fund dropped 6.2% this week. That is the steepest decline since its 7.4% decline the week of Nov. 11, 2016, when the outcome of the U.S. presidential election took markets by surprise.
Stocks ended Friday largely flat despite more positive news on trade. China said it would exempt some U.S. farm products from increased tariffs. President Donald Trump also hinted that he might consider an interim deal with China.
The S&P 500 ended the day down slightly on Friday but less than 1% below its all-time high as a drop in Apple stock countered cooling U.S.-China trade tensions. All three major U.S. stock indexes posted their third straight weekly gains, capping a week that saw signs of a potential thaw in the trade war between the world's two largest economies, which has gripped markets for months.
U.S. stocks close mostly lower but the Dow makes an 8th straight gains as Sino-American trade tensions ease and central banks support risk taking with easy money.
A gauge of global stocks rose for an eighth straight day and benchmark government bond yields climbed on Friday after signs of progress in U.S.-China trade talks, as well as a solid U.S. retail sales report, allayed recession worries. U.S. President Donald Trump said on Thursday he was potentially open to an interim trade deal with China, although he stressed an "easy" agreement would not be possible.
U.S. stocks closed mostly lower on Friday after easing trade tensions and central bank policy moves briefly buoyed investor sentiment earlier in the day. The S&P 500 was down less than 0.1% to end near 3,007. The Dow Jones Industrial Average advanced 36 points, or 0.1%, to finish around 27,219, based on preliminary numbers.The Nasdaq Composite fell 0.2% to end near 8,177. The blue-chip Dow clinched its eighth consecutive gain, its longest such streak since 2018. Both the Dow and the S&P remain less than a percentage point away from their all-time highs set in July. Retail sales rose faster than expected in August, increasing by 0.4%. Investors also saw signs that Washington and Beijing were moving towards a more constructive stance on trade negotiations. The European Central Bank announced a full stimulus package on Thursday, including rate cuts and the restart of an open-ended bond purchasing program.
Actress Felicity Huffman on Friday was sentenced to 14 days in jail and fined $30,000 for her involvement in the college-admissions cheating scheme, according to reports. Huffman, best known for her role in the TV series "Desperate Housewives," pleaded guilty to conspiring to pay $15,000 to a fake charity that facilitated cheating when her daughter took college entrance examinations. The Wall Street Journal reported that Huffman's two-week stint in jail was about half of what prosecutors were seeking. Huffman also was sentenced to 250 hours of community service and a year of supervised release, the paper reported on its website.
Treasury yields rise Friday after signs that U.S. consumer spending remain strong and positive developments on trade tensions between the U.S. and China
Stocks were mixed heading into the last hour of trade as the Dow Jones Industrial Average attempts to extend its win streak to eight.
Wall Street was mixed on Friday, with the S&P 500 and the Dow hovering just below all-time highs as cautious optimism regarding easing U.S.-China trade tensions was held in check by a drop in Apple stock. Tariff-vulnerable industrials helped keep the blue chip Dow in positive territory, which was on track for its eighth straight daily advance, its longest winning streak since May 2018.
Gold futures end lower on Friday, giving up earlier gains to feed a loss for the week as appetite returns for assets perceived as risky and bond yields climb.
Losses in shares of U.S. technology majors Apple and Broadcom held the S&P 500 just under record levels on Friday, as traders balanced the latest indicators of an uncertain global growth outlook with perceived progress in Sino-U.S. trade relations. Broadcom Inc, among the world's biggest chipmakers, weighed on the tech-heavy Nasdaq with a 2.6% fall, after it said in results late on Thursday that demand for microchips had bottomed out and that a recovery was not yet on the cards.
STOCKSTOWATCHTODAY BLOG Flattish. The three major U.S. stock market indexes were near their break-even point, wavering following seven straight sessions of gains despite more upbeat news. Beijing said it would exempt some U.
September’s stock market gains have been broad based and driven by performance of cyclical sectors, and these trends may be bullish for the overall market
Broadcom Inc, among the world's biggest chipmakers, weighed on the tech-heavy Nasdaq after it said in results late on Thursday that demand for microchips had bottomed out and that a recovery was not yet on the cards.
Losses in shares of U.S. technology majors Apple and Broadcom set Wall Street for a subdued end to the week, as traders balanced the latest indicators of uncertain global growth outlook with perceived progress in Sino-U.S. trade relations. Broadcom Inc, among the world's biggest chipmakers, weighed on the tech-heavy Nasdaq after it said in results late on Thursday that demand for microchips had bottomed out and that a recovery was not yet on the cards.