Morning Notes

13/07/2018 Argonaut Morning Note

U.S. stocks rose Thursday, putting major indexes on track for a rebound from a midweek selloff. Shares of technology companies led the stock market higher. A major software-deal announcement appeared to fuel the buying spree, sending the S&P 500 technology sector up more than 1%. The Dow Jones Industrial Average rose 0.8% in the last half-hour of trading. The S&P 500 gained 0.9%, while the tech-heavy Nasdaq Composite added 1.3%. CA led tech firms and the broader S&P 500 higher after Broadcom agreed late Wednesday to buy the software company for $18.9 billion. Shares of CA rose 18% and appeared to boost the stocks of other software companies that trade in the S&P 500, including Red Hat and Autodesk, up more than 3% each, while Salesforce.com added 2.4%. Shares of Lockheed Martin rose 2%, while Boeing, a Dow component, added 1.5%. Airline stocks got a boost after Delta Air Lines reported profits that beat analyst expectations, even though the company said higher fuel costs will weigh on profits for the rest of the year. Shares of Delta added 1.5%. Overall, profit results are expected to build on the strong first quarter, analysts said. S&P 500 companies are expected to increase second-quarter earnings 20% from a year earlier. That should help stabilize stock prices and push major indexes higher, with analysts predicting a 13% price increase in the S&P 500 over the next 12 months, FactSet said. The US gold price gained 0.5% to record 1246.90 US$/oz.

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12/07/2018 Argonaut Morning Note

U.S. stocks slumped as concerns over escalating trade tensions and falling oil prices outweighed optimism about the upcoming earnings season. The Dow Jones Industrial Average lost 0.9%, while the S&P 500 declined 0.7% and the technology-heavy Nasdaq Composite dropped 0.4%. The indexes are on track to break a four-session winning streak and remain modestly higher for the week. The Trump administration said late Tuesday that it would assess 10% tariffs on an additional $200 billion in Chinese goods. The tariffs, which wouldn't come into effect for at least two months, cover a variety of Chinese products including consumer goods. China called the move "totally unacceptable" in a statement attributed to an unnamed ministry spokesman and vowed to roll out unspecified countermeasures. Despite the sharp declines, many investors remain bullish on the energy sector, which has seen the largest increase in earnings estimates for the second quarter, according to Factset. Some investors, though, are worried that product-specific tariffs could lead to price increases for U.S. consumers and put pressure on the Federal Reserve to raise interest rates. And the latest round of economic data showed firming inflation, as a gauge of U.S. business prices rose in June. The producer-price index, a measure of the prices businesses receives for their goods and services, rose 3.4% from the year before, the largest annual increase since November 2011, the Labor Department said Wednesday. The US gold price fell 1.1% to 1,241.0 US$/oz.

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11/07/2018 Argonaut Morning Note

U.S. stocks rose Tuesday, putting major indexes on track for their seventh session of gains in the past eight trading days, as investors looked ahead to what is expected to be another strong corporate earnings season. The Dow Jones Industrial Average was up 0.5% in the last hour of trading, while the S&P 500 added 0.3% and the Nasdaq Composite gained less than 0.1%. The blue-chip index had its best day in a month Monday, and all three indexes have climbed in recent sessions, despite uncertainty over trade threats with China. Two sectors that have underperformed this year -- utilities and consumer staples – led the way in the S&P 500. Financials were the only sector in the red. Many investors are looking ahead to the second-quarter earnings season, which unofficially kicks off Friday, when three of the biggest U.S. banks report results. Earnings for companies in the S&P 500 are expected to grow 20% in the second quarter from the year-earlier period, according to FactSet. The first round of tariffs between the U.S. and China went into effect Friday, but U.S. stocks have risen since then as there haven't been signs of escalating tensions yet. The US gold price fell 0.2% to 1,255.0 US$/oz.

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10/07/2018 Argonaut Morning Note

The Dow Jones Industrial Average headed toward its best day in a month as investors focused on a strong jobs report from late last week and the coming earnings season, despite heightened trade tensions. Recent tariffs have kept investors on edge, with the U.S. and China slapping levies on $34 billion of each other's exports on Friday. Some fear the protectionist trade policies will slow corporate activity and crimp global growth, hurting a range of assets from stocks to commodities. Many are looking ahead to second-quarter earnings season, which begins in earnest Friday with results from some of the nation's largest banks, to see how the trade threat is affecting companies. In the last half hour of trading the Dow industrials climbed 1.37%, on track for its largest one-day climb since June 6. The S&P 500 added 0.86%, while the tech-heavy Nasdaq Composite rose 0.81%. All three indexes were on track for a sixth day of gains in the past seven sessions. Trading has been quiet lately, with Friday the lowest-volume day for a full session this year on exchanges owned by the New York Stock Exchange and Nasdaq. In the coming earnings season, analysts will also be looking for signs that corporate profits might be peaking. Earnings at companies in the S&P 500 are expected to increase 20.7% from a year earlier, according to Thomson Reuters I/B/E/S. That would be the second-best quarterly gain in over seven years. The US gold price gained 0.2% to 1257.20 US$/oz.

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09/07/2018 Argonaut Morning Note

U.S. stocks jumped Friday and posted weekly gains, as signs of a buoyant labor market helped investors look past escalating trade tensions between the world's two biggest economies. Investors contended with a confluence of forces heading into the end of the trading week. Labor Department data Friday showed the number of job seekers rising in June and U.S. employers adding to payrolls for the 93rd consecutive month-extending what has been the longest continuous jobs expansion on record. The unemployment rate ticked higher, but remained near an 18-year low. The upbeat report helped reassure many that the U.S. economy remains on strong footing, even as some worry that increasingly fractious trade policies around the world could weigh on global growth. The U.S. slapped levies on $34 billion of China's exports early Friday, while in response, China's State Council said it applied tariffs on 545 U.S. items ranging from agricultural products to vehicles. The Dow Jones Industrial Average rose 0.4%, to 24456.48. The S&P 500 added 0.8%, to 2759.82 and the Nasdaq Composite advanced 101.96 points, or 1.3%, to 7688.39.  The gains came in a quiet session, with just 5.2 billion shares changing hands across exchanges owned by the New York Stock Exchange and Nasdaq--the lowest volume for a full trading day this year. For the week, the Dow industrials added 0.8%, while the S&P 500 notched a 1.5% gain and the Nasdaq posted a 2.4% advance, its biggest one-week rise since May.

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