Stock Market Update

[BRIEFING.COM] It's another record-setting day on Wall Street, with the S&P 500 (+0.6%), Dow Jones Industrial Average (+0.6%), and Nasdaq Composite (+0.6%) setting new intraday highs after NEC Director Kudlow said a Phase One trade agreement is close to being reached. 

Risk sentiment is being manifested across nine of the 11 S&P 500 sectors, including the value-oriented health care (+1.3%) and energy (+0.9%) sectors, as well as the trade-sensitive industrials (+0.8%) and information technology (+0.7%) sectors. The defensive-oriented utilities (-0.1%) and consumer staples (-0.1%) sectors are the lone holdouts.

Applied Materials (AMAT 62.18, +5.23, +9.2%) leads the Philadelphia Semiconductor Index (+1.0%) higher after providing solid results and guidance, although conservative guidance from NVIDIA (NVDA 204.01, -4.75, -2.3%) has limited overall gains. 

It's also worth mentioning that the market's most widely-held stocks Apple (AAPL 264.75, +2.11, +0.8%), Microsoft (MSFT 149.79, +1.73, +1.2%) and Alphabet (GOOG 1329.88, +18.42, +1.4%) continue to provide influential leadership. 

As for trade, the market has heard "close" before, but it's also been inundated, it seems, with reports suggesting that both sides are struggling to reach a deal. Calls for a pullback have been unanswered, and with the prospect of a trade deal boding well for earnings growth, the path of least resistance remains up for stocks. 

The U.S. Treasury market, meanwhile, isn't getting carried away just yet. A three-day advance has been tamed, but the benchmark 10-yr yield is up just one basis point to 1.83%. The U.S. Dollar Index is down 0.2% to 97.99. 

Separately, shares of RH (RH 189.34, +14.12, +8.1%) and Occidental Petroleum (OXY 38.99, +1.23, +3.3%) are up noticeably after Warren Buffet's Berkshire Hathaway (BRK.B 219.88, +0.52, +0.2%) disclosed new positions in the companies. 

Reviewing today's batch of economic data:

• October retail sales increased 0.3% m/m (Briefing.com consensus +0.2%) following an unrevised 0.3% decline in September. Excluding autos, retail sales jumped 0.2% (Briefing.com consensus +0.4%) after declining an unrevised 0.1% decline in September.
  • The key takeaway from the report, other than it shows continued growth in discretionary spending, is that it will be a positive input for Q4 GDP. Core retail sales, which exclude autos, gasoline, building materials, and food services and drinking places sales, and which factor into the goods component of the PCE calculation, were up 0.3%.
• Import prices for October were down 0.5%. Excluding fuel, they were down 0.2%. Export prices were down 0.1%. Excluding agricultural products, they were down 0.3%.
  • The key takeaway from the report is that it points to an indolent inflation backdrop.
• Industrial production slumped 0.8% in October (Briefing.com consensus -0.4%) on the heels of an upwardly revised 0.3% decline (from -0.4%) in September. The capacity utilization rate fell to 76.7% (Briefing.com consensus 77.1%) from 77.5% in September.
  • The key takeaway from the report is that, while the GM strike had a big impact on industrial production, things were still weak excluding that impact. To wit, the Federal Reserve reports industrial production declined 0.5% excluding motor vehicles and parts.
• Total business inventories were unchanged month-over-month in September (Briefing.com consensus +0.1%) after a downwardly revised 0.1% decline (from 0.0%) in August. Total business sales were down 0.2% following a downwardly revised 0.1% increase (from 0.2%) in August.
  • The key takeaway from the report is that the gap between inventory growth on a yr/yr basis (+3.7%) and sales growth (+0.5%) remains, which should help keep prices in check.