Stocks cruised higher Monday as chips rose and positive Brexit news out of the U.K. lifted global markets. Drug industry names led by McKesson (MKC) and Cardinal Health (CAH) reportedly reached an opioid crisis settlement, averting a trial. The Nasdaq sailed 0.5% higher. The S&P 500 jumped 0.4%. The Dow Jones today traded just above its break-even line, as Boeing (BA) shares took a hard early hit.
XCaterpillar (CAT) surged 2% to the top of the Dow — possibly on comments from White House economic advisor Larry Kudlow, who said the December round of U.S. tariffs against China could potentially be avoided. JPMorgan (JPM) and Goldman Sachs (GS) soared 1.7% and 1.9%, respectively. Boeing swooned 4.8%, as fallout continued after text messages from a Boeing test pilot related to the development of its 737 MAX aircraft were released Friday.
Fragrance and cosmetics brand Coty (COTY) soared 13% to the top of the S&P 500. News reports said the company was exploring strategic possibilities for its professional beauty unit.
Oilfield services giant Halliburton (HAL) rallied almost 7%, despite third-quarter revenue coming in short of the analysts' target. Hewlett-Packard Enterprise (HPE) also traded higher on the S&P 500, up 4.8% after Bank of America boosted the stock all the way to buy, from underperform, with a price target of 19.
U.K.-based life insurer Prudential (PUK) surged more than 5% after completing the long-awaited spinoff of M&G, its U.K. and Europe insurance business. Prudential now covers insurance in the U.S., Asia and Africa.
Chip stocks made early gains after a Bank of America note provided positive third-quarter previews for both Advanced Micro Devices (AMD) and Dow Jones stock Intel (INTC). AMD popped 2.7% in opening trade. Intel gained 0.7%. IBD Leaderboard name ASML Holding (ASML) rose 1.3%. ASML, a Netherlands-based chip-equipment maker, extended shares with a 9% gain after breaking out from a flat-base pattern in September.
Yandex Surges
Some Russia-related issues ran higher on reports that Russia may ease limits to proposed ownership restrictions on strategically important companies. Yandex (YNDX), the most popular search engine on Russia's internet, soared 9% in premarket trade. Qiwi (QIWI), which provides online payments systems in Russia and neighboring countries, jumped 3%. Yandex is based in the Netherlands. Qiwi claims Cyprus as its headquarters. Both stocks dived sharply this month ahead of the expected rule change.
Opioid Settlement, Exxon On Trial
Big drug distributors McKesson, AmerisourceBergen (ABC) and Cardinal Health trimmed sharp early losses. Reports said the group reached a limited settlement in time to avoid an opioid addiction crisis trial due to begin in an Ohio court this morning.
The Washington Post reported the companies reached a $260 million settlement with two Ohio counties. More details are due to be released later Monday morning. McKesson cut its premarket loss to 1.5%. Cardinal Health eased to a 1.5% drop. AmerisourceBergen declined 2%.
Teva Pharmaceuticals (TEVA), also reportedly part of the agreement, reversed early losses and gained 0.5%.
Exxon Mobil (XOM) also heads to court, in New York, where it faces charges of misleading shareholders regarding the potential impact of climate change regulation on company valuation. The closely watched trial begins Tuesday. Exxon shares edged up 0.6% early Monday.
Dow Jones Today: Heavy Earnings Week
The heavy schedule of blue-chip earnings reports continues this week, with Microsoft, Intel, McDonald's (MCD), Visa (V), Boeing, United Technologies (UTX) and Verizon (VZ) all set to report during the week. The seven companies combined account for nearly 30% of the total weighting of the Dow industrials index. Microsoft and Verizon are both near buy points. McDonald's and United Technologies get the ball rolling on Tuesday.
The Dow Jones starts the week largely unchanged, hovering narrowly below the 27,000 level, a little more than 2% below its July record high and holding above its 50-day line of support.
Distribution days continue to creep higher on the Nasdaq and S&P 500, raising some caution flags over the stock market's current, confirmed uptrend. Keep an eye on small caps this week, with the Russell 2000 poised just below its 40-week moving average with a two-week rally under its belt.
For more detailed analysis of the current stock market and its status, study The Big Picture.
Asian Markets Positive; Europe Rallies
Global markets mostly laid low Monday. China ended effectively flat, with fractional gains in both Shanghai and Hong Kong. In Japan, Tokyo's Nikkei 225 added 0.3% — its sixth gain in the past seven sessions.
Europe's markets traded higher after U.K. Prime Minister Boris Johnson officially asked the European Union for yet another extension to the Oct. 31 deadline for Britain's exit from the EU. A parliament vote shot down Johnson's Brexit proposal on Saturday. The Prime Minister pushed for another vote on Monday, with aims to force the deal through before Oct. 31.
Frankfurt's DAX rallied 1.2% in afternoon trade, while London's FTSE 100 and the CAC-40 in Paris were up 0.3% and 0.5%, respectively.
For more detailed analysis of the current stock market and its status, study the Big Picture.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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