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Michael Haddad
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To fight? Shares are trying to return Tuesday, as bond yields contract. It does not matter how poor the IMF's global growth is or the downturn in the materials sector. American Airlines hit its lowest level in 52 weeks after cutting hurricane forecasts. Today Intraday update we…
Today Intraday update we…
- … talk about returns;
- … Anticipate the season of results; and
- … See what is overwhelming the Super Micro Computer.
Word Is Bond (s)
Stocks were mixed at noon, with the
Dow Jones Industrial Average
down 0.2% while the
S & P 500
was up 0.1% and the
Nasdaq Composite
had increased by 0.4%.
The bond market is again open Tuesday, after Monday's closing, after the Columbus holiday, after trading at nearly 3.25% overnight. The 10-year Treasury yield fell back to 3.21%.
Higher yields have scared the markets lately. Federal Reserve comments have suggested that the government could raise rates more aggressively in response to inflationary pressures. But without evidence that prices are taking off, the evolution of returns could be considered more accurately "in part as a response to evidence of growing growth," writes
Ameriprise
of the
David Joy. Yet, even if high returns reflect growth rather than inflation, "at a certain level, stock prices are likely to be under increasing pressure as bonds become relatively more attractive and valuations come out of valuations. actions, "he says.
We saw this when the S & P 500 lost 1% last week, mainly Thursday and Friday after the Fed chairman. Jerome Powell said it was only the second time stocks had been falling two weeks in a row since June.
Nevertheless, investors seem to be more comfortable with higher returns – and there is enough to arouse at least a little optimism.
Swiss credit
of the
Jonathan Golub writes that the rise in interest rates is positive for equities until the 10-year Treasury debt reaches 3.5%, but this is not the end of the story. "What's important is that this threshold is not a cliff, the increase in yields is quite positive, with the tailwind decreasing to 3½% and the headwind increasing beyond that point."
The increase in yields is not great, but it is not a disaster either.
Investors could also move forward in hopes of another strong earnings season as third quarter reports begin to hit later this week. According to consensus estimates, S & P 500 earnings in the third quarter are expected to increase by 19%, while sales are up 7.2%. Again,
Morgan Stanley
warns that strong results may not be enough: investors are likely to be highly focused on the Q4 outlook, given the likelihood of increased comparisons and the potential impact of tariffs – a topic that direction do not have much detail.
Bulls do not need to look very far to defend their cause: the US economy is solidly based, US companies bring in money, the consumer is healthy and tariffs have not changed yet give it, she writes. Keith Lerner of SunTrust. "We are in a mature phase of the cycle," he wrote with both positive and negative factors, but the evidence "suggests that the bull still has legs, but we continue to expect a trajectory. more difficult". After all, valuations remain cheap, short-term recession risk is low, and central banks remain largely accommodative, even as geopolitical risks increase as the business cycle develops.
UBS
of the
Michael Crook is worried about the reduction in market width, ie some actions are responsible for the lion's share of market gains. He notes that up to now in 2018, 185 companies, or 37% of the S & P 500 index, outperformed the index. "It is a bit behind the recent years and the annual average of 44.3%, but gives a very different picture from the assertion that all returns are due to a few stocks," says he.
Hopefully this party's guest list will not become too exclusive.
Midday move
Alaska Air
(ALK) is down 1.5% to $ 64.35 after Wolfe Research demoted to Peer Perform.
Baker Hughes
(BHGE) is up 1.6% to $ 32.40. Jefferies upgraded to buy.
Rio Tinto
(RIO) is up 1% to $ 50.31 after
Goldman Sachs
upgraded to buy.
Super micro computer
(SMCI) is down 24.4% to $ 11.15 after Bloomberg has reported new evidence of the compromise of its equipment.
Vodafone
(VOD) is down 2% to $ 19.96 after Raymond James demoted to Market Perform.
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