Stocks rallied on Tuesday, with the Dow and the S&P 500 both making fresh all-time highs as the S&P 500 closed above the 2,050 level for the first time. Meanwhile, the price of oil fell again, with West Texas Intermediate crude falling more than 1.5% to back below $US75.
First, the scoreboard:
- Dow: 17,693, +45, (+0.2%)
- S&P 500: 2,052, +10, (+0.5%)
- Nasdaq: 4,702, +31, (+0.7%)
And now, the top stories on Tuesday:
1. On Tuesday morning we got inflation data from the producer price index, which showed that prices rose 0.2% month-on-month in October, beating expectations for a 0.1% decline. Excluding food and energy, prices rose 0.4%, topping estimates for a 0.1% increase, though these data were the result of a weird quirk. Ian Shepherdson at Pantheon Macro, in a note following the report, said that when crude oil falls, input costs to gas stations drop immediately, but retail prices adjust less quickly, therefore recording a temporary increase in the services component of PPI. Crude oil prices fell 9.8% month-on-month in October.
2. Data from the National Association of Home Builders showed that homebuilder confidence rose to 58 in November, up from 54 last month and just a point below September’s reading of 59, which marked a post-crisis high. Shepherdson said the report showed a nice rebound, but cautioned that the long-term relationship between the index and official new home sales numbers has “substantially” overstated sales the past couple of years.
3. Back in October, inflation expectations in the form of “breakevens” were all the rage. Near the market bottom on October 15, breakevens had fallen back towards levels that in the past saw the Fed embark on a new round of quantitative easing. However, at the end of the month, the Fed elected to end QE, and while the stock market has bounced back to make new all-time highs, inflation expectations have tumbled back towards their mid-October lows. Just something to keep an eye on.
4. Apple shares climbed again on Tuesday, adding more than 1% to close north of $US115, as analysts continue to raise their price target on shares of the iPhone maker. Business Insider’s Jay Yarow reported Tuesday that analysts at BTIG Research upped their price target on Apple to $US135 from $US128 for a new, innovative reason: selfies. The firm believes that the “selfie craze” and the enhanced camera features on iPhone 6 could serve as a positive catalyst for sales of the device.
5. A new academic paper suggests that if your company’s CEO is playing lots of golf, your company could be underperforming. Among the report’s finding are that the number of golf rounds a CEO is negatively correlated with changes in firm profitability, and that one S&P 1500 CEO played 146 rounds during a fiscal year.
6. Zoetis, the animal health company that Bill Ackman holds a 10% stake in said on Tuesday that its profit for 2015 would come in below expectations. Shares of Zoetis were halted for trade ahead of the announcement, as the company has been seen as a potential takeover target in the wake of Monday’s news that Actavis would acquire Allergan, the Botox-maker that Ackman had been seeking to acquire with Valeant Pharmaceuticals.
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