US Stock Market Overview – Stocks Rally and Yield Surge as Trade Progress Buoys Sentiment

Jobless claims ease
David Becker
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US Stock prices surged on the open and continue to trade in positive territory for the entire day. The Dow was the best performer rising 0.66%. Sectors were mixed, led up by communications and energy. Utilities and real-estate bucked the trend. Stock prices were buoyed by news that the US and China were planning to phase out tariffs that were put in place in September. This would leave 250-billion of US tariffs in place, but help reduces the downward grab tariffs have had on economic growth.

After the closing bell, Disney reported better than expected financial results, just days before the launch of Disney+. Jobless claims dropped by 11K, showing that the US labor markets report buoyed. US yields surged on Thursday rising by the most in 3-years. Bund yields also rallied, as investors exited fixed-income assets. The dollar continues to rise as the interest rate differential between the US and Germany remained wide.

Despite the rally in stocks, the VIX volatility index moved higher and has stabilized near the 2019 lows. The trend in the VIX is lower as the 50-day moving average crossed below the 200-day moving average known as the death cross.

Trade Agreement Progress Buoys Stocks

On Thursday China announced that the U.S. and China have mutually agreed to roll back tariffs as part of a “phase one” trade agreement. Neither the White House nor the U.S. trade representative issued a public response.

Disney Beats on the Top and Bottom Line

After the closing bell, Disney reported financial results that beat on the top and bottom line. Earnings per share increased to $1.07 per share versus expectations that the entertainment giant would earn $0.95 per share. This came on revenue of $19.1 billion versus expectations that the company would earn $19.04 billion. Disney’s Q4 earnings arrive just days before the launch of Disney+, is set to launch on Tuesday.

Jobs Market Remains Robust

The BLS reported that jobless claims decreased 8,000 to 211,000, which was more of a decline than expected, for the week ended November 2. Data for the prior week was revised to show 1,000 more applications received than previously reported. Expectations were for claims to fall to 215,000 in the latest week. The four-week moving average of initial claims, increased 250 to 215,250 last week.

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