Dow Jones Today: Middle East Calm Proves Meaningful for Stocks

Stock Market

It’s not “peace in the Middle East,” but cooling tensions, at least for the moment, between the U.S. and Iran contributed to a decent day of upside for equities.

Source: Charts provided by Finviz
  • The S&P 500 added 0.67%
  • The Dow Jones Industrial Average climbed 0.74%
  • The Nasdaq Composite tacked on 0.81%
  • On a strong day for financial services names, Goldman Sachs (NYSE:GS) was one of the Dow’s leaders, adding 2%

Today’s upside was all the more impressive when considering there some glum reports out of the retail sector from brick-and-mortar names Bed Bath & Beyond (NASDAQ:BBBY) and Kohl’s (NYSE:KSS), but that’s more of a commentary on the rise of e-commerce than it is an alarm bell for the consumer or the broader economy.

Thursday’s price action also reaffirms what many seasoned investors already know: markets hate uncertainty, but they enjoy the appearance of tranquility.

“If the relative geopolitical calm holds, it will allow traders to switch focus to the next clue on the health of the world’s biggest economy, which will come with the non-farm jobs report,” reports Bloomberg. “Adding to sentiment, the partial trade deal between the U.S. and China looks locked in as China’s vice premier will visit Washington next week for a signing ceremony.”

Gold for Goldman

As noted above, Goldman Sachs was one of the leaders on the Dow Jones today. Shares of the investment bank were boosted after Bank of America and The Buckingham Research Group both upgraded the stock to “buy” from “neutral,” while lifting price targets on the name.

There was some trickle down effect from the Goldman upgrades as American Express (NYSE:AXP), JPMorgan Chase (NYSE:JPM) and Travelers (NYSE:TRV) — the other financial services names in the Dow — were also among the index’s top performers today. In the case of American Express, that’s two days in a row of impressive gains.

Back At It

Apple (NASDAQ:AAPL) was back to doing Apple things on Thursday, gaining 2.1% on its way to another record high on news that iPhone sales to China are looking strong.

“The tech giant shipped around 3.2 million phones in China last month, according to Chinese government,” reports Barron’s.

That’s good for an 18% year-over-year increase and comes as against the backdrop of concerns about the state of the U.S.-China trade relationship and after many analysts speculated that the latest iPhone wasn’t going to deliver astronomical sales.

Coca-Cola Kudos

In late trading, Coca-Cola (NYSE:KO) was on pace to finish the day as the second-best performer in the Dow behind Goldman Sachs. Credit Suisse upgraded Coca-Cola to “outperform” from neutral,” saying the beverage giant “is considerably different compared to a few years ago.”

P&G Power

Keeping with the theme of defensive high flier today, Procter & Gamble (NYSE:PG) joined the party, gaining 1.1%. A deal announced yesterday to acquire Billie, a subscription-based maker of female body care products, appears to be the catalyst behind P&G’s Thursday upside.

“Although we’ve been encouraged by P&G’s recent investments in its internal innovation cycle (facilitated by its decision to narrow its segment exposure after selling about 100 brands from its mix, culminating with the sale of more than 40 beauty brands to Coty in October 2016), we believe that adding niche operators like Billie, which have proved more agile in responding to evolving consumer trends, could further support these efforts,” said Morningstar in a note out today.

Bottom Line on the Dow Jones Today

It’s still early in the new year and while January historically isn’t the best month for stocks, investors may want to consider adding to equities early in the year, at least according to BlackRock.

“What may be more challenging for investors: how gains are distributed. December’s momentum should carry into January, but from there gains may become more elusive,” according to the asset manager. “A less-than-short, brutish and nasty U.S. election cycle may keep stocks rangebound for much of the spring and summer. In other words, January may account for a disproportionate amount of next years’ gains.”

As of this writing, Todd Shriber did not own any of the aforementioned securities.

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