US open: Strategists sound divergent note on outlook for stocks

Alexander Bueso WebFG News | 14 Nov, 2017 17:46 - Updated: 17:46 | | |


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21:26 22/11/17

Stocks are again seeing slight losses on Tuesday as some, but not all, of Wall Street's most veteran investors sound a cautious note on the outlook for the current bull market equities.

At 1652 GMT, the Dow Jones Industrials Average was off by 0.21% or 48.61 points at 23,390.77, alongside a fall of 0.23% or 6.0 points in the S&P 500 while the Nasdaq Composite was down by 0.26% or 16.65 points at 6,741.17.

Pacing losses, the worst areas of the market were: Aluminum (-4.78%), Industrial Metals (-3.29%) and Heavy Construction (-2.61%).

In parallel, the yield on the benchmark 10-year US Treasury note was three basis points lower to 2.38% alongside a 2.2% fall in West Texas Intermediate crude oil futuers for prompt month delivery to $61.82 a barrel on the ICE.

"Icarus is flying ever closer to the sun," Bank of America-Merrill Lynch's chief investment strategist said, pointing to signs of 'irrational exuberance' among investors in the investment bank's latest global survey of fund managers.

"Investors' risk-taking has hit an all-time high. A record high percentage of investors say equities are overvalued yet cash levels are simultaneously falling, an indicator of irrational exuberance," said Merrill's Michael Hartnett.

Indeed, according to the latest FMS average cash balances fell from 4.7% in October to 4.4% in November - their lowest level since October 2013 - as asset managers chased markets higher.

On a cheerier note, strategists at Morgan Stanley conceded that risks were building in the current late-stage 'bull market' for stocks. But for now they recommended clients stay 'overweight'.

"The final year of the bull market can still be uncomfortably profitable, with the S&P 500 up an average of 15%," they said.

Tuesday also marked the last day of US President Donald's Trump's trip to Asia with investors watching out for any developments over the future of a tax reform deal too.

Still on the economic front, the rate of advance in US factory gate prices accelerated from 2.6% in September to 2.8% for November (consensus: 2.5%), according to the Bureau of Labor Statistics.

Meanwhile, the NFIB's small business confidence gauge edged up from 103.0 for September to 103.8 last month (consensus: 104.0).

Chicago Fed President Charles Evans said earlier at the ECB conference in Frankfurt that a new approach to interest-rate setting may be needed to deal with new shocks.

Speaking later in the day at an economic breakfast Kentucky, St. Louis Fed President James Bullard said policy rates were just fine where they were, adding that inflation data year-to-date called into question whether consumer prices were "reliably returning to target".

Atlanta Fed President Raphael Bostic was also due to give a speech on the economic outlook and monetary policy later at 1905 GMT.

Investors develop taste for spicy chicken

In corporate news, Home Depot shares were trading in the green after its quarterly same-store sale beat analysts' expectations, while shares of Buffalo Wild Wings were rocketing on the back of a report in the Journal that a private equity firm had bid more than $2.3bn for the restaurant chain.

Going the other way, TJX Cos. reported worse than expected sales for the three months to September.

GE was also in focus with shares in the industrial conglomerate changing hands at more than five-year lows as analysts at RBC gave a 'thumbs-down' to the company's turnaround plans unveiled during the previous session.

Dow Jones - Risers

United Technologies Corp. (UTX) $118.72 1.41%
Coca-Cola Co. (KO) $47.30 1.24%
Home Depot Inc. (HD) $166.81 0.88%
Caterpillar Inc. (CAT) $137.42 0.65%
3M Co. (MMM) $229.64 0.62%
McDonald's Corp. (MCD) $168.39 0.61%
Pfizer Inc. (PFE) $35.49 0.52%
Cisco Systems Inc. (CSCO) $34.11 0.47%
Visa Inc. (V) $111.88 0.43%
Johnson & Johnson (JNJ) $140.19 0.31%

Dow Jones - Fallers

General Electric Co. (GE) $17.70 -6.93%
Dowdupont Inc. (DWDP) $68.89 -2.22%
Goldman Sachs Group Inc. (GS) $236.69 -1.49%
Walt Disney Co. (DIS) $103.49 -1.19%
Verizon Communications Inc. (VZ) $44.26 -1.11%
Apple Inc. (AAPL) $172.72 -0.72%
Exxon Mobil Corp. (XOM) $82.34 -0.66%
JP Morgan Chase & Co. (JPM) $97.24 -0.64%
Boeing Co. (BA) $261.12 -0.50%
Unitedhealth Group Inc. (UNH) $211.85 -0.38%

S&P 500 - Risers

Advance Auto Parts (AAP) $97.93 19.74%
Mattel Inc. (MAT) $18.66 5.78%
Juniper Networks Inc. (JNPR) $26.39 4.06%
Western Digital Corp. (WDC) $91.94 3.96%
AutoZone Inc. (AZO) $613.42 3.05%
Comerica Inc. (CMA) $78.55 2.26%
Citrix Systems Inc. (CTXS) $86.13 2.22%
Zions Bancorporation (ZION) $46.35 2.03%
Marriott International - Class A (MAR) $122.70 1.92%
Signet Jewelers Ltd (SIG) $70.79 1.91%

S&P 500 - Fallers

Frontier Communications Co. (FTR) $6.37 -8.48%
General Electric Co. (GE) $17.71 -6.93%
Range Resources Corp. (RRC) $17.48 -6.27%
Newfield Exploration Co (NFX) $30.24 -5.78%
Southwestern Energy Co. (SWN) $6.13 -5.77%
Freeport-McMoRan Inc (FCX) $13.66 -5.34%
TJX Companies Inc. (TJX) $67.18 -5.06%
CenturyLink Inc. (CTL) $14.57 -4.93%
Alcoa Corporation (AA) $41.02 -4.89%
Tenet Healthcare Corp. (THC) $13.20 -4.34%

Nasdaq 100 - Risers

Vodafone Group Plc ADS (VOD) $30.52 5.80%
Western Digital Corp. (WDC) $91.94 3.96%
Citrix Systems Inc. (CTXS) $86.13 2.22%
Marriott International - Class A (MAR) $122.70 1.92%
O'Reilly Automotive Inc. (ORLY) $217.44 1.53%
Shire Plc Ads (SHPG) $140.04 1.24%
Ulta Salon, Cosmetics & Fragrance Inc. (ULTA) $200.40 1.20%
Verisk Analytics Inc. (VRSK) $91.11 1.10%
Mondelez International Inc. (MDLZ) $42.48 1.02%
Activision Blizzard Inc. (ATVI) $64.26 1.01%

Nasdaq 100 - Fallers, Inc. (JD) $38.52 -6.81%
Discovery Communications Inc. Class A (DISCA) $16.28 -4.18%
Discovery Communications Inc. Class C (DISCK) $15.27 -4.11%
Gilead Sciences Inc. (GILD) $70.55 -3.16%
Alexion Pharmaceuticals Inc. (ALXN) $110.05 -3.00%
Incyte Corp. (INCY) $104.25 -2.76%
Sirius XM Holdings Inc (SIRI) $5.35 -2.73%
Ctrip.Com International Ltd. Ads (CTRP) $45.25 -2.65%
Hologic Inc. (HOLX) $39.60 -2.56%
Charter Communications Inc. (CHTR) $335.51 -2.39%

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