Just last week, it appeared as though the U.S.-China trade situation was headed to one of its darkest places yet as President Donald Trump threatened a risky plan to delist Chinese companies trading on major U.S. exchanges.
Fortunately, cooler heads prevailed on that front with the Treasury Department saying over the weekend that plan is not under serious consideration. That was enough to send stocks higher on the final trading day of the third quarter. It’s a relief because officials from the U.S. and China have already been engaged in some of level trade discussions ahead of more substantive meetings slated for October.
The rally in riskier assets Monday was enough to send gold to its lowest monthly finish in two months and weakness in the yellow metal today whittled its quarterly gain to 3.4%. Below $1,500 an ounce, some gold bulls may abandon ship.
To start the week and close the third quarter, the Nasdaq Composite advanced 0.75% while the S&P 500 rose 0.50%. The Dow Jones Industrial Average tacked on 0.36% with 22 of its 30 components pointed higher in late trading.
All About Apple
Gaining 2.35% today, Apple (NASDAQ:AAPL) was the leading performer in the Dow. Indeed, some of Monday’s Apple ebullience was attributable to the aforementioned relief on the China trade front because the iPhone maker is one of the more tariff-sensitive names out there.
Speaking of the iPhone, it was news pertaining to that smartphone that fueled Apple’s advance today. In a note out today, JPMorgan said Apple’s latest iPhone is selling better than expected. That’s a place surprise because expectations were in place prior to the debut of the iPhone 11 that sales would be muted as customers waited to upgrade for next year’s 5G rollout.
“We are modestly raising our iPhone volume forecasts and expect investor sentiment on AAPL shares to improve materially given the firm’s ability to drive upward revision to volume expectations,” said JPMorgan analyst Samik Chatterjee. “We expect solid consumer interest in 5G phones at the premium end of the North American market, and Apple is well positioned to drive an outsized share with its 2020 product cycle.”
Surprise Winner
Merck (NYSE:MRK) doesn’t often visit this space, but it does today and with good reason. The stock was the second-best Dow performer today behind Apple after Merck and partners Bristol-Meyers Squibb (NYSE:BMY) and Seattle Genetics (NASDAQ:SGEN) revealed positive trial results for Merck’s immunotherapy Keytruda at the European Society for Molecular Oncology (or ESMO) today.
“The product is already under review by the U.S. Food and Drug Administration as a second-line treatment for bladder cancer,” according to Barron’s. “But it wowed analysts and ESMO attendees with it first-line effectiveness in the Keytruda combo. In a Phase 1/2 trial, 71% of patients showed a response to the combo treatment.”
The healthcare sector has been struggling this year, so it was definitely a positive to see Merck behaving in bullish fashion today. Some other big-name pharmaceuticals companies are presenting at the ESMO conference, so it’s possible the healthcare sectors gets some more upside over the near-term.
Streaming Addition
Shares of Walt Disney (NYSE:DIS) posted a modest gain, but there was some interesting streaming news out pertaining to the stock today. ESPN+, which will be part of the Disney + streaming offering, secured the rights to stream Bundesliga soccer (football), starting next August and running through 2026. The Bundesliga is Germany’s premier soccer league.
Resilience In Defeat
Somehow, Boeing (NYSE:BA) lost just half a percent today even as the stock was hit on multiple fronts. One set of reports indicated the 737 MAX passenger did not include the same safety protocols as the military version of the jet. Second, a UBS report said Boeing and rival Airbus could see reduced demand for passenger jets in the years ahead due to climate change concerns.
Regarding the second point, I’ll believe it when I see it because Boeing’s backlog is massive, indicating demand isn’t slowing anytime soon.
Bottom Line on DJIA
Tomorrow, the fourth quarter stocks arrive and with it come hopes that the last three months of the year live up to their historical reputation as being kind stocks. In each of the three months comprising the fourth quarter, the S&P 500 averages gains with October usually being the best of the trio with an average jump of 1.4% for the U.S. equity benchmark.
Todd Shriber does not own any of the aforementioned securities.