U.S. Stocks Start Week Higher
August 20 2018 - 10:25AM
Dow Jones News
By Riva Gold
U.S. stocks opened slightly higher Monday as investors weighed
the latest flurry of deal activity and looked ahead to central-bank
signals expected later in the week.
The Dow Jones Industrial Average climbed 59 points, or 0.2%, to
25728 shortly after the opening bell, while the S&P 500 also
added 0.2%. Both indexes were on track for a third straight session
of gains, with the S&P 500 less than 1% from its January
record. The Nasdaq Composite rose 0.2%.
PepsiCo agreed to buy home-carbonation company SodaStream
International for $3.2 billion, the latest move by the cola giant
to diversify away from sugary sodas and salty snacks. Pepsi shares
were down 0.1%, while SodaStream added 9.9%.
Tyson Foods climbed 0.1% after it said it would buy Keystone
Foods, a major supplier of chicken nuggets to McDonald's and other
companies, for $2.2 billion as part of its strategy to bolster its
protein offerings and expand globally.
Despite worries about weakness in emerging markets and the trade
fight between the U.S. and China, stocks have shown resilience this
summer. Investors are now waiting to see if the S&P 500 can set
a new record high after coming within 0.5% of that level earlier
this month before retreating.
Some analysts expect strong U.S. economic and earnings figures
to continue buoying major indexes and were encouraged by the latest
trade developments late last week. Negotiators from the U.S. and
China have been working out talks to try to end their trade
standoff ahead of planned meetings between President Trump and
Chinese leader Xi Jinping at multilateral summits in November, The
Wall Street Journal reported.
Worries about a growth-hindering trade war have hurt stocks
around the world and other risk assets such as commodities in
recent months. Minutes from the Federal Reserve's August meeting,
due later this week, as well as the Kansas City Fed's annual
Jackson Hole symposium could show how central bankers view the
latest developments, analysts said.
Investors were also keeping an eye on the Turkish lira Monday,
as the currency's sharp declines this summer have fueled anxiety
about the declines spreading to other emerging markets. It fell
2.4% against the dollar Monday.
S&P Global Ratings and Moody's Investors Service on Friday
downgraded Turkey one notch further below investment grade, citing
recent extreme economic and financial volatility.
The Trump administration also rejected an effort by Turkey to
tie the release of a U.S. pastor with relief for a major Turkish
bank facing billions of dollars in U.S. fines, a senior White House
official said.
"When it comes to Turkey specifically, I wouldn't say they're
out of the woods just yet," said Mohammed Kazmi, a portfolio
manager at Union Bancaire Privée, noting the country's central bank
will have to raise interest rates significantly to reassure
investors.
Combining Turkey's situation with a recent strengthening of the
dollar, "it brings the focus back on short-term external debt
levels within emerging markets, especially as it looks like the Fed
will continue hiking [rates]," he said.
Some analysts worry that the dollar's strength could also pose a
challenge for large multinational firms by making U.S. exports less
competitive in global markets. It has also challenged some
commodity investors by making materials priced in dollars more
expensive for overseas buyers.
On Monday, the WSJ Dollar Index, which tracks the dollar against
a basket of 16 other currencies, edged up less than 0.1%. The yield
on the benchmark 10-year U.S. Treasury note edged down to 2.837%,
according to Tradeweb, from 2.873% Friday. Yields fall as bond
prices rise.
Elsewhere, gains in commodity-linked firms pushed the Stoxx
Europe 600 up 0.6% after the index posted its biggest weekly
decline since June.
Earlier, stocks in Asia were mostly higher Monday after an
upbeat finish Friday on Wall Street. Hong Kong's Hang Seng added
1.4%, while the Shanghai Composite Index rose 1.1% after five
sessions of declines.
Amrith Ramkumar contributed to this article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
August 20, 2018 10:10 ET (14:10 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.