Yahoo Finance Google goes to Washington, CBS shareholders meet: What to know in markets Tuesday
Stocks staged an impressive reversal midday on Monday with tech leading the charge higher. After spending most of the day in the red, the S&P 500 (^GSPC) ended the session up 0.18%. The Dow (^DJI) was up 34.31 points, and the tech-heavy Nasdaq (^IXIC) rose 0.74% points.
Google (GOOGL) CEO Sundar Pichai heads to Washington on Tuesday to testify before the House Judiciary Committee. Pichai is the latest tech executive to face Congress after being thrust into the spotlight in August after President Trump slammed the company for potential bias on its search engine.
After being rescheduled twice, CBS (CBS) will be holding its annual shareholder meeting in NYC on Tuesday. This is the first shareholder meeting since former Chairman and CEO Les Moonves was ousted from his seat at the company following an investigation into sexual misconduct during this tenure.
On the economic data front, the Bureau of Labor Statistics will release the Producer Price Index (PPI) data for November. Economists polled by Bloomberg are expecting an unchanged reading for the month after seeing a +0.6% jump in October.
There are no notable earnings reports scheduled for Tuesday.
And here’s what caught Yahoo Finance’s markets correspondent Myles Udland’s eye.
Monday was a ‘moral victory’ for investors
On Monday, markets shook off what was shaping up to be an ugly day for investors.
When the closing bell on Wall Street rang, the major averages were all in the green with the Dow gaining 34 points, or 0.14%, the S&P 500 adding 4 points, or 0.18%, while the tech-heavy Nasdaq lead the gains, rising 51 points, or 0.74%.
From their intraday lows, the Dow and S&P 500 gained more than 1% on Monday, a rally that Bespoke Investment Group called a “moral victory” for investors.
S&P 500 up 1% off the intraday lows. Another moral victory day.
— Bespoke (@bespokeinvest) December 10, 2018
There have been a few of these days recently, notably last Thursday’s 710-point intraday rally in the Dow. On Friday, a 559-point drop in the Dow didn’t have many investors recalling the prior day’s pseudo-victory.
But overall, the market clearly remains in a downtrend. The 50-, 100-, and 200-day moving averages for the S&P 500 are all trending lower. Strategists are calling the current market environment a preview of what to expect in the year ahead — lower stock prices and higher volatility.
Monday’s intraday rally was also accompanied by bad breadth, with Bloomberg’s Andrew Cinko noting that about two-thirds of the stocks in the S&P 500 declining the start the week while the overall index settled in the green. This is a pattern that markets saw last Thursday before another flush on Friday.
David Woo, credit strategist at Bank of America Merrill Lynch, said Monday that he hasn’t been this concerned about the market environment since 2008, telling Bloomberg that trade is an “issue that won’t go away anytime soon.” Woo added: “The only thing I’m confident in is volatility will be high next year.”
Oliver Jones, markets economist at Capital Economics, said Friday, “We think that [last] week’s turbulence provides a reasonable guide to the trends to watch for in markets next year. In particular, while both the S&P 500 and U.S. Treasury yields have started to drop a little sooner than we had previously anticipated, we still suspect that both have much further to fall in 2019.”
Wall Street’s forecasts for the markets in 2019, however, have generally pointed to modestly rising stock prices. Strategists cite earnings growth that is forecast to still be above-trend, bearish sentiment providing the opportunity for a pain trade of higher stock prices, and stock multiples that make the market look attractive as some of the factors bolstering equities in the year ahead.
But what the market is telling you matters most right now is trade. It’s unclear that this issue is improving. And as we highlighted on The Final Round on Monday, the number one concern among corporate managements remains trade.
On Monday, a Chinese court banned the sale of older iPhones in China as part of a patent dispute between Qualcomm (QCOM) and Apple (AAPL). Apple, however, said that all iPhones remain on sale in China.
That a Chinese court has ruled against Apple in the wake of the arrest of Huawei CFO Meng Wanzhou in Vancouver should not go unnoticed. Tensions between the U.S. and China clearly remain high, with the most prominent tech companies from each country now facing legal pressure from a foreign court.
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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