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NEW YORK (Reuters) – Wall Street indexes ended the first session of the week in a disorganized fashion, as the Dow and S & P-500 were supported by energy stocks and defensive stocks, helped by a drop in prices. bond yields, while on the contrary Apple weighed on the Nasdaq Composite.
The reinstatement of US sanctions against Iran, and particularly against the oil, banking and transport sectors, on November 4 has, at least initially, boosted the oil market and, in turn, boosted energy values.
The Dow Jones index gained 190.87 points, or 0.76%, at 25,461.70 points. The broader S & P-500 took 15.25 points (0.56%) at 2,738.31 points. The Nasdaq Composite left 29.36 points (0.40%) at 7,327.63 points.
Risk aversion has taken its toll on sectors such as technology, communications and non-core consumer goods.
"Whatever the political color, we do not know what will happen on Tuesday and that should affect the next few years, in which case we choose security," said Kim Forrest (Fort Pitt Capital Group). ).
The week is important for the stock market, as indeed for all financial markets, because of the mid-term US elections on Tuesday, and the Federal Reserve's monetary policy meeting on Wednesday and Thursday, an event always long awaited, this time seeing some solid statistics recently published, including that of the job Friday.
Polls predict that Republicans will retain the Senate but lose control of the House of Representatives, which would be embarrbading for President Donald Trump and his pro-business policy, a major element of the dynamism of the stock market since the 2016 presidential election.
Third-quarter companies' results were better than expected, with 78% of the companies having so far broken the consensus, and Q4 earnings growth would be the strongest since the fourth quarter 2010, where it had been 37.2%, according to Refinitiv I / B / E / S data.
In view of the results published by 381 companies out of 500 composing the Dow Jones and estimates for the others, earnings growth is estimated at 27.4% in the third quarter, well above the 21.6% forecast on October 1st. It would supplant 26.6% growth in the first quarter and 24.9% in the second quarter.
Still according to Refinitiv data, earnings growth would drop to 9% next year from 23.9% this year.
The volume was 7.07 billion shares traded against an average of 8.76 billion over the last 20 sessions.
VALUES
Apple lost 2.8% after already yielding 6.6% Friday, the Japanese newspaper Nikkei reported that the US high-tech group had informed its subcontractors they had to give up increasing the number of production lines dedicated to the badembly of the iPhone XR, on sale since last month.
Apple suffered its highest loss in two sessions since January 2013.
Berkshire Hathaway on the contrary gained more than 5%, and thus supported the Dow and the S & P, after announcing a doubling of quarterly operating profit. It also helped to make the Financials index gain 1.4%.
The Chevron tanker gained 3.7%, driven by the encouraging statements of the intermediary Jefferies, including its cash flow.
This is the second largest increase in the Dow Jones, contributing to the 1.61% increase in an energy sector index, which has underperformed the S & P 500 since the beginning of the year.
This is the second sectoral performance of the day behind real estate (+ 1.7%). Utilities gained 1.4% and basic necessities 1.2%.
International Business Machines, for its part, is back on the rise and gains 3.8%, the best performance of the Dow Jones, after being badly sanctioned by the market for its purchase of the Linux distributor Red Hat.
INDICATORS OF THE DAY
Business growth in the US services sector slowed less than expected in October, the results of the Institute of Supply Management (ISM) monthly survey of purchasing managers showed on Monday.
THE SESSION IN EUROPE
Stock markets paused on Monday after last week's upturn as investors look to the United States, where a mid-term, Donald-style political and personal referendum election will be held on Tuesday. Trump.
The benchmark indexes finished the session in a disorganized manner in a market environment still marked by fears over trade tensions, the effects of the monetary tightening underway in the United States and the slowdown in the Chinese economy.
In Paris, the CAC 40 ended almost unchanged (-0.02%) at 5,101.39 points and the German Dax fell by 0.21% while the British Footsie was up 0.14%. The EuroStoxx 50 index advanced by 0.09% and the FTSEurofirst 300 by 0.04% but the Stoxx 600 lost 0.16%.
RATE
Treasuries' returns have fallen as investors returned to the market after last week's releases to reduce their short positions and guard against any surprises in Tuesday's US election.
As the Fed also meets on Wednesday and Thursday, investors have no desire to engage extreme positions before these two major events.
After a busy session, the 10-year yield dropped by more than one basis point to 3.201%. The 30-year yield lost two basis points to 3.434%, after climbing 3.444% on Friday, the highest since July 2014. The 2-year yield was little changed, at 2.912%, not far from the highest since June 2008 of 2.920% off Friday.
The Treasury has auctioned $ 37 billion worth of three-year bonds, the first phase of a quarterly refinancing that is expected to raise $ 28.7 billion in new money to finance the budget deficit.
EXCHANGE
The dollar fell on Monday after three consecutive weeks of gains, a victim of profit-taking before the mid-term elections, a possible source of volatility on the financial markets.
Movements on the dollar, however, were limited due to uncertainties surrounding the US election.
The dollar index, which measures its evolution against a basket of currencies, lost 5.3 basis points to 96.39. It had reached 97.20 last week, the highest since June 2017.
Speculators have built up long net dollar positions that have never been so wide since December 2016.
OIL
Oil prices ended in a disorganized Monday on the Nymex New York market, reacting differently to the new sanctions that Washinton imposed on Tehran.
But the trend was rather bearish, with the future of Brent moving downward after a rising settlement.
THINGS TO LOOK FOR TUESDAY 6 NOVEMBER:
Mid-term elections in the United States. Ecofin meeting of Finance Ministers of the European Union.
(Sruthi Shankar, Sinéad Carew, Stephanie Kelly, Richard Leong, Kate Duguid, Wilfrid Exbrayat for French service)
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