Most of the recent daily gains accrued by broader equity benchmarks have been of the solid though not spectacular variety. That’s alright because gains are gains and stocks are continuing to trend higher in the final month of 2019.
- The S&P 500 added 0.03%
- The Dow Jones Industrial Average rose by 0.11%
- The Nasdaq Composite tacked on 0.10%
- Following through on some recent bullishness, Goldman Sachs (NYSE:GS) was again one of the best-performing names in the Dow on Tuesday.
Today’s upside marked the eighth time in the past 10 days that the S&P 500 closed higher. A duo of solid data points sparked equities higher today.
Earlier today, “the Federal Reserve released industrial production data showing U.S. factory production rose strongly in November as production in the auto sector picked up after a strike at General Motors Co. Industrial production, a measure of factory, mining and utility output, increased a seasonally adjusted 1.1% in November from the prior month,” reports Dow Jones.
Placing Home Depot (NYSE:HD) among the Dow’s top names on an intraday basis for a second consecutive day was a report indicating permits for new housing jumped to a 12 and a half year high last month with housing starts jumping 3.2%.
Those encouraging data points were enough to have 17 of the Dow’s 30 members higher in late trading. That’s an average number, but with some of the index’s biggest names doing the heavy lifting, the Dow closed higher on the day.
Speaking Of Big Names
Boeing (NYSE:BA), the worst performer in the Dow yesterday, eked out a Tuesday gain, but there’s still ample headline risk to consider with the aerospace giant. In today’s installment of “As Boeing’s World Turns,” Southwest Airlines (NYSE:LUV) said it’s extending its suspension of 737 MAX orders until April after Boeing itself said it’s suspending production of that plane until at least January.
Making matters worse is that Boeing’s 737 MAX woes aren’t confined to the company; they permeate the broader economy.
“A JPMorgan analyst estimated that, even idled, the Max program will still cost Boeing $1 billion a month, and could deal a blow to the broader U.S. economy,” reports NBC News. “Mark Zandi, chief economist at Moody’s Analytics, said the shutdown could shave one- to two tenths of a percentage point from first-quarter GDP growth in 2020.”
All About AirPods
Do you or someone on your holiday shopping list want a set of AirPods from Apple (NASDAQ:AAPL)? Apparently, the answer to that question is usually “yes” because the AirPods, which sell for a whopping $249, are out of stock across a variety of online shopping venues.
“It’s another major validation for (Apple CEO Tim) Cook and Cupertino that AirPods could be a major incremental growth driver going forward,” said Wedbush analyst Daniel Ives in an interview with Barron’s. “This holiday season is a feather in the cap for the bulls and should help drive a nice December upside.”
I don’t know how much it costs to make one pair of AirPods, but my guess is not much. Just look at a picture of these things. The markup must be huge, so give Apple plenty of credit getting consumers to swoon for a high-priced but cheap-to-produce product.
A Familiar Refrain On Microsoft
In modest fashion, Microsoft (NASDAQ:MSFT) was one of the Dow losers today, but Wall Street continues to like the stock with the prevailing wisdom being more upside is coming due to the growth of the Azure cloud business.
Ives, the aforementioned analyst, covers Microsoft in addition to Apple, and reiterated an “outperform” rating today on the former while lifting his price target on the name to $185 from $170.
“Microsoft remains in an enviable position heading into 2020 on the heels of its cloud success as it continues to fire on all cylinders around its Office 365 and Azure strategic vision,” said the analyst in a note to clients.
The analyst pointed out that Azure is still in the early innings of growth, indicating 2020 could be another strong year for Microsoft stock as the company wins new cloud customers.
More Analyst Chatter
Johnson & Johnson (NYSE:JNJ) has been dealing with its fair share of litigation headlines this year, explaining why the stock will wind being a 2019 laggard. That said, JNJ is on a torrid pace this month, gaining more than 8%.
There was upside in the name today as JNJ added 1.2% to rank as one of the Dow’s Tuesday leaders.
Morgan Stanley was out with a note saying the stock is attractively valued while noting litigation risk is ebbing. The bank boosted its rating on JNJ to “outperform” from “market weight” while lifting its price target to $170 from $145.
Bottom Line on the Dow Jones Today
Not to rain on the parade and to be fair, it seems likely that stocks will move higher into year-end, but there are some trade issues to ponder and they involve China. Essentially, Phase I is a step in the right direction, but it doesn’t solve all the trade issues between the world’s two largest economies.
“The trade war nonetheless appears far from over, even with a Phase One deal,” said Fitch Ratings in a note out today. “The effective US tariff rate on Chinese imports will remain well above the level of around 3% prior to the launch of the trade war. Meanwhile, Fitch believes that underlying strategic tensions will remain between the US and China, particularly in fields such as technology, which will pose a major obstacle to full resolution of the trade war.”
As of this writing, Todd Shriber did not hold a position in any of the aforementioned securities.