U.S. stocks began the week on a positive note as shares continued the recent record run on the heels of an unexpected jump in regional manufacturing activity that coupled with some upbeat Chinese economic data to aid global economic optimism. The advance for stocks may have been limited as market participants await a host of earnings and economic reports expected later this week. Treasury yields and the U.S. dollar ticked higher, while gold was flat and crude oil added to last week's gains. In equity news, Nordstrom traded lower after suspending its search to go private.
The Dow Jones Industrial Average (DJIA) increased 85 points (0.4%) to 22,957, the S&P 500 Index added 4 points (0.2%) to 2,558, and the Nasdaq Composite gained 18 points (0.3%) to 6,624. In moderate-to-light volume, 695 million shares were traded on the NYSE and 1.6 billion shares changed hands on the Nasdaq. WTI crude oil increased $0.42 to $51.87 per barrel and wholesale gasoline was flat at $1.62 per gallon. Elsewhere, the Bloomberg gold spot price lost $9.00 to $1,294.82 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% higher at 93.31.
Nordstrom Inc. (NYSE:JWN $40) saw heavy pressure after the retailer announced, in light of the difficulty of obtaining debt financing in the current retail environment, it suspended active exploration, for the balance of the year, of the possibility of proposing a transaction to take the company private. The company said it intends to continue its efforts to explore the possibility of making a going private proposal after the conclusion of the holiday season.
Aramark Holdings (NYSE:ARMK) (ARMK $42), a provider of uniforms and food to schools and stadiums, announced agreements to acquire competitors Avendra for about $1.35 billion, as well as AmeriPride Services Inc. for $1.0 billion. ARMK finished little changed.
Regional manufacturing activity jumps to three-year high
The Empire Manufacturing Index showed output from the New York region jumped further into a level depicting expansion (a reading above zero) for October. The index rose to 30.2—the highest since 2014—from September's unrevised 24.4 level, with the Bloomberg forecast calling for a decline to 20.2.
Treasuries dipped, with the yield on the 2-year note rising 4 basis points (bps) to 1.53%, the yield on the 10-year note advancing 3 bps to 2.30%, and the 30-year bond rate ticking 1 bp higher to 2.82%. Bond yields and the U.S. dollar nudged higher and have been choppy as inflation remains in focus and global economic growth remains steady, while global monetary policy uncertainty lingers and the markets continue to grapple with the potential for tax reform.
Tomorrow, the U.S. economic calendar will offer the Import Price Index for September, expected to have increased 0.6% month-over-month (m/m), matching the increase seen in August. Additionally, we'll receive the Fed's September industrial production and capacity utilization report, forecasted to show production increased 0.3% m/m and utilization ticked higher to 76.2%. The housing market will also garner attention with tomorrow's release of the NAHB Housing Market Index, with economists anticipating October's reading to match the 64 posted in September, where the 50 mark represents the point of separation for good versus poor conditions.
Europe mixed, Asia mostly higher
European equity markets finished mixed amid persistent global economic optimism following some upbeat Chinese and U.S. economic data, while a report showed the eurozone trade surplus widened more than expected. Crude oil prices extended last week's gains to support the energy sector, bolstered by reports of turmoil in parts of Kirkuk, a Kurdish-controlled oil rich province, per Reuters.
Stocks in Asia finished mostly higher on the heels of last week's gains in the U.S. to fresh record highs, culminating with a cooler-than-expected consumer price inflation reading that kept accelerated Fed monetary policy tightening concerns in check. Japanese stocks continued to rally, for their tenth-straight session of gains, rising to levels not seen in over two decades, despite some strength in the yen as the U.S. dollar slipped. Mainland Chinese stocks declined and shares trading in Hong Kong advanced following mixed reads on inflation in September, as well as late-Friday's reports that showed lending activity topped forecasts for last month. The markets are awaiting a flood of Chinese economic data this week, headlined by its Q3 GDP report, along with the beginning of the 19th National Congress of the Communist Party. South Korean equities moved higher, while Indian and Australian securities gained ground.
The international economic docket for tomorrow will yield new motor vehicle sales from Australia, CPI, PPI and house prices from the U.K., investor confidence from Germany and CPI for the Eurozone.