By Chris Matthews and William Watts, MarketWatch
Apple shares rally after Morgan Stanley raises price target
U.S. stock-market indexes closed higher Monday, as investors
adjusted expectations around a widely anticipated rate cut by the
Federal Reserve at the end of the month and began wading through a
sea of corporate results after a strong start to earnings
season.
How did the major benchmarks fare?
The Dow Jones Industrial Average rose 17.7 points, or 0.1%, at
27,171.9, while the S&P 500 index advanced 8.42 points, or
0.3%, to 2,985.03, supported largely by gains in the
information-technology sector (up 1.2%). The Nasdaq Composite Index
gained 57.65 points, or 0.7%, to trade at 8,204.14.
What drove the market?
After a strong start to earnings season last week, investors
began parsing the first of many major U.S. corporate earnings
reports Monday, with 144 S&P 500 companies and a third of Dow
components set to report this week.
"Investor optimism has been supported by a better-than-expected
start to the Q2 EPS reporting season, as well as the ongoing
possibility of a rate cut by the end of the month," said Sam
Stovall, chief investment strategist at CFRA, in a Monday note.
Stocks were bruised late last week as investors scaled back
expectations for a half-point rate cut after the New York Federal
Reserve emphasized that dovishly interpreted remarks by its
president
(http://www.marketwatch.com/story/feds-wisest-strategy-is-to-cut-interest-rates-at-first-sign-of-economic-distress-williams-says-2019-07-18),
John Williams, weren't about potential policy actions at the next
Fed meeting. Also, The Wall Street Journal on Friday,
(http://www.marketwatch.com/story/sp-500-turns-negative-after-report-indicates-a-25-basis-point-cut-at-july-fed-meeting-2019-07-19)
(http://www.marketwatch.com/story/sp-500-turns-negative-after-report-indicates-a-25-basis-point-cut-at-july-fed-meeting-2019-07-19)
(http://www.marketwatch.com/story/sp-500-turns-negative-after-report-indicates-a-25-basis-point-cut-at-july-fed-meeting-2019-07-19)citing
public remarks and interviews, reported Fed officials were
(http://www.marketwatch.com/story/sp-500-turns-negative-after-report-indicates-a-25-basis-point-cut-at-july-fed-meeting-2019-07-19)signaling
a quarter-point cut when policy makers meet July 30-31.
Shares of energy services firm Haliburton Co.(HAL) ended the day
9.2% higher, after the company reported second-quarter profit that
topped expectations
(http://www.marketwatch.com/story/halliburtons-stock-gains-after-profit-beats-expectations-but-revenue-fell-a-bit-shy-2019-07-22).
Heavyweights due to report in the week ahead include Facebook
Inc.(FB) , Coca-Cola Co.(KO) , Caterpillar Inc.(CAT) and McDonald's
Corp.(MCD).
Read:Forget the Fed -- stock-market investors brace for Dow's
busiest week of earnings
(http://www.marketwatch.com/story/forget-the-fed-stock-market-investors-brace-for-dows-busiest-week-of-earnings-2019-07-20)
"So far in 2Q19 reporting season, 79% of the S&P 500 results
that have come in have beaten consensus EPS expectations (down from
83% in our last update) while 63% have beaten consensus on sales
(down from 75% in our last update)," wrote Lori Calvasina, head of
U.S. equity strategy at RBC Capital Markets. "Despite the slippage,
EPS beats are still near the high end of their historical range,
and both EPS and sales beats are still tracking well above the 1Q19
reporting season."
Analysts said investors will also be focusing on results and
management commentary for concerns over the global economic outlook
and the impact of the U.S.-China trade war on performance and
outlook.
Read:Here are the 9 S&P 500 companies blaming the trade war
for performance or outlook, so far
(http://www.marketwatch.com/story/earnings-season-here-are-the-9-sp-500-companies-blaming-the-trade-war-for-performance-or-outlook-so-far-2019-07-19)
U.S.-China trade negotiations were in focus, after reports that
the two sides would soon meet face-to-face, with the South China
Morning Post saying
(https://www.scmp.com/economy/china-economy/article/3019604/us-trade-war-negotiators-likely-visit-china-next-week-first)
that U.S. Trade Representative Robert Lighthizer and U.S. Treasury
Secretary Steven Mnuchin would travel to Beijing next week.
Also supporting equity markets were reports
(https://www.wsj.com/articles/debt-ceiling-and-spending-negotiations-split-republicans-11563749967?mod=article_inline)
that the Congress and the White House had reached a deal to
increase spending levels and suspend the federal debt limit for two
years.
Oil futures were up strongly Monday as tensions between Iran and
Western nations rose following Tehran's announcement on Friday that
it had seized a British-flagged oil tanker
(http://www.marketwatch.com/story/iran-says-its-seizure-of-british-ship-a-reciprocal-move-2019-07-20).
Crude oil rose 0.8%.
See:Iran seizes British-flagged oil tanker -- here's what you
need to know about the Strait of Hormuz
(http://www.marketwatch.com/story/strait-of-hormuz-oil-choke-point-in-focus-as-trump-says-us-downed-iranian-drone-2019-07-18)
The Chicago National Activity index rose to negative-0.02 in
June, up from negative-0.05 in May, the Federal Reserve Bank of
Chicago said Monday
(file:///c:/Users/matthewschristopher/Downloads/cfnai-july2019-pdf.pdf).
Check out:The economy is likely to get a mediocre grade on its
next report card, but don't take it at face value
(http://www.marketwatch.com/story/the-economy-is-likely-to-get-a-mediocre-grade-on-its-next-report-card-but-dont-take-it-at-face-value-2019-07-20)
Which stocks were in focus?
Equifax Inc. (EFX)came to a $700 million settlement
(http://www.marketwatch.com/story/equifax-to-pay-at-least-575-million-in-settlement-with-ftc-cpfb-and-states-over-2017-hack-2019-07-22)
with federal regulators and U.S. states related to a 2017 data
breach that exposed the personal data of nearly 150 million
Americans. Shares rose 0.4% Monday.
Shares of DaVita Inc. (DVA) rallied 4.9% Monday, after the
dialysis-services company raised its profit outlook for the second
quarter, ahead of an expected execution
(http://www.marketwatch.com/story/davitas-stock-rallies-after-profit-outlook-raised-2019-07-22)
of a $1.2 billion share repurchase program.
Apple Inc. (AAPL) shares rose 2.3% Monday, making it the
best-performing Dow component on the day, after Morgan Stanley
analyst Katy Huberty raised her price target
(http://www.marketwatch.com/story/apple-stock-gains-after-morgan-stanley-hikes-target-ahead-of-earnings-2019-07-22)
on the stock to $247 from $231 ahead of the company's Tuesday
afternoon earnings report.
How did other markets trade?
The yield on the 10-year U.S. Treasury note fell less than a
basis point
(http://www.marketwatch.com/story/treasury-yields-struggle-for-direction-as-traders-looks-ahead-to-ecb-meeting-2019-07-22)
to 2.043%.
Stock markets in Asia closed mostly lower Monday
(http://www.marketwatch.com/story/asian-shares-mostly-fall-as-new-stock-market-debuts-in-shanghai-2019-07-21),
with China's Shanghai Composite falling 1.3%, Japan's Nikkei 225
losing 0.2% and Hong Kong's Hang Seng retreating 1.4%. European
stocks edged higher
(http://www.marketwatch.com/story/european-markets-edge-up-as-investors-eye-key-ecb-guidance-update-2019-07-22),
with the Stoxx Europe 600 ending the day up 0.1%.
The price of gold fell 0.1%,
(http://www.marketwatch.com/story/gold-looks-for-direction-after-hitting-6-year-high-2019-07-22)
while the U.S. dollar rose 0.1% relative to its major trading
partners.
(END) Dow Jones Newswires
July 22, 2019 16:17 ET (20:17 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.