The market is closed for the day and investors are looking forward to what’s next.
US stocks finished higher on Monday, the first day of trading after the United States and Mexico agreed to a deal to avoid tariffs on Mexican imports. The Dow logged the sixth day of gains in a row for the first time since May last year. The S&P 500 and the Nasdaq Composite climbed for the fifth consecutive session.
Gains in the Dow were led by financials and technology stocks, like Goldman Sachs (GS) and Intel (INTC), which led the field. They climbed 2.3% and 1.7%, respectively.
United Technologies (UTX) was the biggest loser in the Dow, dropping 3.1%. The company announced late yesterday it would merge with defense business Raytheon (RTN). President Donald Trump voiced his concern about what the merger would do to competition in the aerospace and defense sector in an interview with CNBC this morning. Raytheon shares ended the day 0.7% higher.
It’s not just the stock market that’s flying high. The Mexican peso is also rebounding as investors breathe a sigh of relief after the United States reached a deal with Mexico that averts tariffs.
The Mexican peso rallied more than 2% against the dollar today, leading it to its best level since late May.
The peso had fallen to its lowest level since December on May 31 after President Donald Trump threatened the tariffs, according to Refinitiv.
The recent stock rally is starting to make a difference.
The S&P 500 is just 2% off its closing record high of 2,945.83, which it reached on April 30, according to Refinitiv.
Stocks have been going strong since last week, when Federal Reserve Chairman Jerome Powell said the central bank would act “as appropriate” to ensure the economic expansion of the United States would be sustained. The market took this to mean that interest rate cuts will come sooner than expected. Today, the rally continued as investors grew optimistic on trade after threatened tariffs on Mexican imports were scrapped.
The S&P was up 0.6%, on track for its fifth straight day of gains.
The Dow and the Nasdaq Composite were up 0.4% and 1.2%, respectively. The Dow is looking a its sixth day of consecutive gains, and the Nasdaq has climbed for five days in a row.
Despite demands from President Donald Trump and whims of the market, some people think its premature for the Fed to lower rates.
Why?
With that in mind, it might behoove the Fed to remain patient instead of rushing to cut rates.
That’s especially true since some point out that any recent weakness in the economy and stock market might have more to do with a somewhat manufactured crisis, namely the US trade tension with China.
“Barring major escalations in the trade dispute, the economy seems okay,” he added.
At midday, stocks are squarely in the green as the market breathes a sigh of relief after the United States and Mexico reached a deal that avoids import tariffs on Mexican goods.
“The decision not to impose tariffs on Mexico also suggests to us a lower probability of tariffs on additional imports from China or on auto imports from the EU and Japan,” wrote Goldman Sachs economist Alec Phillips.
The Dow is up more than 200 points, or 0.8%, while the S&P 500 and the Nasdaq Composite are up 1.1% and 1.9%, respectively.
But it’s not all that peachy. M&A announcements from the weekend and this morning are weighing on some shares.
United Technologies (UTX), which announced yesterday it would merge with defense business Raytheon (RTN), is the biggest loser in the Dow, down 1.4%.
Raytheon is up 2.3%.
Salesforce (CRM) is the weakest stock in the S&P, down more than 4%. The company announced it would acquire Tableau Software (DATA) earlier today. Shares of Tableau are up a whopping 35.8%.
Hudson’s Bay (HBAYF) stock soared 45% after its executive chairman and others revealed a plan to take the struggling retail giant private. The company owns Lord & Taylor, Saks Fifth Avenue, Saks Off 5th as well as namesake department stores.
The release said a group of shareholders, which owns 57% of Hudson’s Bay, submitted a proposal to take it private at $9.45 per share in Canadian dollars. That’s a 50% premium from Friday’s close.
Last month, the company announced it was pursuing strategic options, including a merger or sale for Lord & Taylor.
President Donald Trump attacked the Federal Reserve once again on Monday morning, when he called into CNBC’s Squawk Box show to talk tariffs, trade and corporate America.
When asked whether Beijing was devaluing its currency to lessen the impact of US-imposed tariffs, the president said “Absolutely. They devalue their currency and they have done for years.”
The United States didn’t have that advantage with the strong dollar, he said. And the Fed’s interest rates hikes were to blame.
“They made a big mistake, raising interest rates far too fast,” the president continued. China, on the other hand, was pumping money into its system while devaluing its currency, he said, adding that Chinese President Xi Jinping was the de facto head of the central bank.
Trump’s continued attacks on the Fed and its monetary policy have some investors worried about the central bank’s independence.
The Fed has raised interest rates nine times since cutting rates to ultra-low levels in the aftermath of the financial crisis. However, it took its foot off the gas in January and is now expected to cut rates before the end of the year amid slowing economic growth and risks posed by the ongoing trade spat.
The top five cash-rich companies — Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN) and Facebook (FB) — drew down their war chests by a combined $111 billion, according to a new Moody’s report.
Apple alone held $245 billion in cash at the end of 2018, down nearly 17% from the year before.
Still, Apple’s cash pile is bigger than the aggregate amount of cash of every non-tech industry, according to the firm.
The report revealed that US non-financial companies were sitting on $1.69 trillion at the end of 2018.
While that’s an epic amount of money, it’s down by 15% from the record $1.99 trillion at the end of 2017.
Wall Street is celebrating after the United States and Mexico reached a deal that avoids opening a new front in the Trump administration’s global trade war.
The rally comes after US markets surged last week, posting their strongest performance of 2019.
In addition to the Mexico deal that averts tariffs, markets were boosted by a pair of big deals.
United Technologies (UTX) and Raytheon (RTN) traded flat after reaching a blockbuster deal to join forces in an all-stock merger.
Tableau Software (DATA) soared 36% after reaching a deal to be sold to Salesforce (CRM) for $15.7 billion. Salesforce dropped 3%.
Hurray, markets look like they’ll open higher! Last week was the best week for blue-chips all year! The Dow was up five days in a row, Yippee!
Not so fast. We just lived through a week of the upside-down logic of Wall Street where bad news is actually good news.
The bad news: The president’s trade experiments seem disconnected and unpredictable. A weak US jobs report suggests a potential turning point in business confidence in May, which is the very month investors began to believe the president’s trade war with China was not temporary at all.
All the gloom has investors betting the Federal Reserve might have to backstop the US economy with a rate cut later this summer or later this year.
Anyone who has been investing for the past decade knows Wall Street loves cheap money and stock investors love the idea the Fed Chief Jay Powell will be the shock absorber for the president’s trade shocks.
But be careful what you wish for: When the Fed cuts rates, it’s usually for a bad reason. A weakening economy. A financial crisis. And usually, when the Fed cuts rates, it begins cutting them from levels a lot higher than where we are today. It doesn’t give policymakers much room to maneuver.
Kraft Heinz (KHC) is moving higher in premarket trading, per our Paul R. La Monica:
As he previously reported, the company is in trouble.
Investors are growing concerned that the company focused too much on cost cutting following the 2015 merger of Kraft and Heinz and not enough on finding new, innovative food products that younger consumers would actually want to buy and eat.
The stock is down 33% for the year.
Salesforce (CRM) announced plans to buy Tableau Software (DATA) in a $15.7 billion all-stock deal.
“Tableau helps people see and understand data, and Salesforce helps people engage and understand customers,” said Salesforce CEO Marc Benioff in a statement.
Tableau shareholders will get 1.103 shares of Salesforce, according to the terms of the deal.
Stock in the data analytics company soared 34% in premarket trading, while Salesforce’s slipped 3%.
The deal comes just a few days after Alphabet (GOOGL) said it has agreed to acquire Looker, a business intelligence platform, for $2.6 billion in cash. The acquisition will help bolster its cloud computing division by providing customers with more powerful data analytics.
Beyond Meat (BYND), the plant-based protein company, is on fire.
The company had a wildly successful initial public offering last month. Since then, its stock price has increased dramatically with shares trading more than five times the $25 IPO price.
On Friday, the stock gained 40% following its first-ever earnings report. And it’s continuing to move higher: Shares are rallying 20% in early trading on Monday.
Beyond’s executive chair Seth Goldman told CNN Business’ Danielle Wiener-Bronner over the weekend that the company is experiencing a “breakthrough moment.”
Two of Uber’s top executives are leaving the company one month after its lackluster Wall Street debut.
Uber (UBER) said late Friday that its chief operating officer, Barney Harford, and chief marketing officer, Rebecca Messina, will depart the company.
The stock is down 1% in premarket trading.
GDP in the United Kingdom fell by 0.4% in April as Brexit uncertainty continued to take a toll.
The Office for National Statistics pointed to a steep drop in car production due to planned shutdowns put in place around the original Brexit deadline.
It also cited broader manufacturing weakness. Stockpiling faded as the date of Britain’s departure from the EU was pushed back again.
United Technologies (UTX) and Raytheon (RTN) have agreed to merge, creating an aerospace and defense powerhouse.
The companies currently have a market value of $166 billion. The deal, announced Sunday, is one of the biggest corporate mergers of 2019.
It won’t include United Technologies’ elevator and air conditioning units, which the company will spin off in 2020.
How investors are reacting: Shares of Raytheon (RTN) are tracking 2.8% higher in premarket trading, while stock of United Technologies (UTX) is up 5%.
The announcement of a deal between the United States and Mexico to stave off US tariffs is boosting global markets.
US President Trump on Friday called off tariffs on goods from Mexico that would have gone into effect this week.
The reversal is good news for US stock indexes. The Dow, S&P 500 and Nasdaq are coming off their best weeks of the year, boosted by investor optimism that the Federal Reserve could be on the verge of cutting interest rates.
