US Stock Market Overview – Stocks Rally Led by Technology, Utilities Bucked the Trend

Monday mergers buoy US equities
David Becker

US stocks moved higher on Monday, as the S&P 500 notched up its 5th straight daily gain.  Stocks were buoyed following news over the weekend that the US and Mexico had reached a trade deal. There were 2-large merger announcements which included United Technologies and Raytheon merging and Salesforce.com purchasing Tableau the analytic softward company. Sectors were mixed, with technology leading the broader markets higher. Utilities along with consumer staples bucked the trend.

Salesforce.com Purchases Tablea

Merger Monday lead off with Salesforce.com purchasing Tableau Softward for 15-billion in stock. The deal is aimed at expanding its digital offerings beyond customer-relationship management tools at Salesforce.com. The San Francisco business-software company has made a series of large acquisitions in recent years that would give clients more services and tools to analyze their customer interactions and sales and marketing data. Salesforce is speculating on continued digital transformation that would get many of its current and prospective customers further into the cloud.

United Technologies Mergers with Raytheon

United Technologies is merging with Raytheon to establish the the U.S.’s second-largest aerospace-and-defense company. Shareholders of both firms were mildly positive on the deal based. Commercial aviation and defense will each make up roughly 50% of revenue for the combined firm once other businesses are shed. UTC is contributing Collins Aerospace, which manufactures engine parts, landing in its engine-making division, Pratt & Whitney. Raytheon specializes in radars and missiles, and 68% of its sales are to the US government.

Trump Loves Tariff

President Donald Trump loves levying tariffs and confirmed on Monday that additional tariffs on Chinese goods would occur Chinese President Xi Jinping does not attend this month’s G-20 meeting. The president has threatened another $300 billion in Chinese goods if a trade agreement is not reached soon. This would be devastating for the US economy as nearly all of the tariffs would be on goods that the US buys in heavy volume from China. The Trump administration increased tariffs last month on $200 billion worth of goods the U.S. imports from China. The Trump administration decided this weekend that they would not place tariffs on Mexico. They appartely reached a deal.

US yields Remain Under Pressure Pointing to a Rate Cut

US yields edged higher after tumbling on Friday in the wake of the softer than expected US jobs data. The futures market is now pricing in two interest rate cuts in 2019. There is a 20% chance at a cut at the June 19, meeting and an 80% chance of a cut at the July meeting. Its hard to see other data points pointing to strength, although weak yields can help buoy the housing market, which would be supportive of growth.

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