The Dow Jones Industrial Average rose to an all-time high on Tuesday, putting the blue-chip index on track for a fourth straight session of gains and its 14th record close of the year.
The market’s strength on the back of a robust domestic economy underscored the continued divergence in U.S. stocks versus global equities as concerns over a variety of potentially disruptive events abroad prompted investors to focus on the U.S.
Where are the major benchmarks trading?
The Dow
DJIA, +0.32%
climbed 135 points, or 0.5%, to 26,784. The blue-chip average hit an all-time intraday high of 26,799.93, supported by gains in major industrial stocks like Caterpillar Inc.
CAT, +1.56%
and Intel Corp.
INTC, +3.56%
and Boeing Co.
BA, +1.02%
The S&P 500
SPX, -0.15%
gained 4 points, or 0.2%, to 2,929 while the Nasdaq Composite Index
COMP, -0.65%
fell 4 points to 8,033.
Don’t miss: A 6-month win streak for the stock market may mean that the rally is just getting started
The Russell 2000 index
RUT, -1.11%
of small-capitalization shares declined 0.6% to 1,662. The recent underperformance by small stocks compared with large ones has been cited as a potential warning sign for the market’s future prospects.
What’s driving trading?
The gains in industrial stocks are a sign that some concerns over trade policy are fading as the sector has a high correlation to the issue. The improved view came a day after the U.S. and Canada unexpectedly reached a deal to revise the North American Free Trade Agreement. While that was taken as a sign of progress, it doesn’t address outstanding differences in U.S.-China trade relations, which is considered a bigger factor for markets.
However, White House officials are betting that concluding a trade deal with Mexico and Canada will give them more ammunition in their high-stakes battle with China.
Learn more: Tensions Rise Between Washington and Beijing
Trade is still seen as a factor that can weigh on the global economy. Late Monday, International Monetary Fund chief Christine Lagarde delivered a warning on global growth that placed much of the blame on trade worries. In her comments, Lagarde said there were signs major economies such as the U.S. had ”plateaued.”
In another potential risk factor for stocks, Italy last week unveiled a 2019 budget deficit target that has met stiff opposition from European Union officials, who say it will violate the bloc’s fiscal rules. Italian and EU officials continue to bicker, with Rome refusing to back down, sending Italian bond yields higher.
In the U.K., the Conservatives’ annual party conference was getting under way with Prime Minister Theresa May facing pressure over her proposal for future U.K.-EU relations, known as the Chequers plan, which has already been rejected by EU leaders. Any additional signs of political instability in Europe could weigh on the U.S., where multinational firms have a large amount of revenue exposure to the region.
Read: Stock investors ask, can the U.S. stay afloat while the rest of the world sinks?
Federal Reserve Chairman Jerome Powell reiterated that he did not see signs that inflation could spike despite the low unemployment rate. “Many factors, including better conduct of monetary policy over the past few decades, have greatly reduced…the effects that tight labor markets have on inflation,” Powell said in a speech to the National Association for Business Economics.
The comments come just days after the Fed raised rates for the third time this year and indicated it would do so again in December.
Separately, Dallas Fed President Robert Kaplan will participate in a Q&A, while Randal Quarles, the Fed’s vice chair for supervision, will testify before the Senate Banking Committee later Tuesday.
On the economic data front, September car sales will be released throughout the morning.
What are market analysts saying?
“U.S. stocks outperformed most other asset classes—including government and corporate bonds, cash, and gold—for the month, the quarter, and year-to-date,” wrote Savita Subramanian, equity and quant Strategist at Bank of America Merrill Lynch, in a Tuesday report. “Similarly, within equities, large cap U.S. stocks outperformed other regions in third quarter amid escalating trade tensions and EM concerns.”
So far this year, the S&P 500 is up 10.6% on a total return basis this year versus a 2.7% decline for the rest of the world, she said.
“U.S. stocks are mixed with the global markets looking past yesterday’s trade agreement with Canada, as the U.S./China relationship remains contentious,” Charles Schwab analysts wrote in a report. “Records in the U.S. stock market do not, in our view, mean that investors should get more aggressive in their investment stance. High expectations, elevated investor sentiment, trade disputes, and the possibility of a monetary mistake lead us to take a more cautious stance.”
What stocks are in focus?
PepsiCo Inc.
PEP, -1.90%
reported third-quarter earnings and revenue that beat expectations. The stock fell 1.1% as it also warned about the strength of the U.S. dollar.
Amazon.com Inc.
AMZN, -1.77%
shares fell 0.3%. The giant online retailer said it was raising its minimum wage to $15 an hour for all U.S. employees, effective Nov. 1.
Stitch Fix
SFIX, -35.46%
tumbled 32% after it late Monday reported fourth-quarter earnings that beat expectations, though revenue was slightly under forecasts and it missed estimates for active clients, considered a key metric for subscription-based companies.
Tesla Inc.
TSLA, -3.65%
fell 1.3% following strong gains on Monday. The electric car maker said it produced 53,239 Model 3 vehicles, in line with its target, and beat delivery expectations for the third quarter.
Facebook Inc.
FB, -2.03%
extended losses, falling 1.5% after an analyst at Deutsche Bank said advertisers are cautious about the company given the recent data breach.
Where are other markets trading?
Stock markets in Asia traded lower, with trade tensions between the U.S. and China once again acting as a headwind. Major European indexes also fell.
Crude-oil prices
CLK9, -0.20%
reversed earlier gains to slide, while gold
GCM9, +1.19%
was up 0.2%. The U.S. dollar index
DXY, +0.20%
edged higher.
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Source : MTV
