S&P 500 hits all-time high, Alphabet, Beyond Meat to report

For all the chatter, bulls remain in charge: we’ve just had another all-time high for the S&P 500, breaking the July 26th peak at 3,027.98 to trade as high as 3,042. The break higher above the previous record high may likely open up a new leg higher, although we will need to see where this closes tonight – though at present it’s looking odds-on to finish above the previous 3,025.86 closing peak. 

It’s a remarkable achievement against faltering corporate earnings, a festering (if not quite total) trade war, and softer macro data everywhere you look. Bulls had tried their hardest Friday but some really positive noises on trade nudged us over the line today. President Trump said the US and China are looking to be ahead of schedule on sign the ‘phase one’ trade deal at the APEC meeting in Chile in mid-Nov. The bar on a US-China trade deal had been set so low that the market seems content with this pretty puny agreement. At least the direction is positive.  

Although earnings are softer, we’ve seen a beat rate of about 75% of those S&P 500 stocks reporting so far. We’ve also got the Fed carrying out stealth QE in the shape of these overnight repo interventions, which it beefed up last week and increasingly don’t look very temporary. When you have unlimited liquidity and can bank on the Fed coming to the rescue, risk wins. It doesn’t look like the Fed will disappoint this week either, although it may choose to use this meeting to signal a pause to its rate-cut cycle. Also of course we have the ECB relaunching QE and even the BoJ might try to find some more pennies down the back of the sofa – quite what it can do beyond what’s already doing is hard to fathom, but that’s never stopped a central bank before. 

The market is starting the week very much risk-on, but there are a lot of risk events coming up this week, as we detailed in the week ahead. Gold has softened significantly today as risk finds bid, with the metal sinking to $1493.

European equities are looking in much better shape than they were this morning. The DAX firmed to 12,960, a gain of 0.5%.  The FTSE managed to rally into positive territory around lunch time having been down for much of the morning as it caught a lift from the US and the comments on trade. The prospect of an election doesn’t seem to frightening investors too much. Sterling steady around $1.2860 as it looks near certain that we’ll have a General Election in Dec.

A couple of interesting earnings reports are due out tonight. First Alphabet, expected to deliver approx. $40.3bn in revenues after the close tonight. Slowing growth in ad revenues in Q1 (+17%, or +19% on constant currency basis) spooked traders but this was put right by the improvement (+19%, or 22% on constant currency basis) in Q2. That’s probably the number one metric for investors in Q3. After Q2 we noted that we do still see a trend in declining revenue growth.

Q2 earnings per share rose to $14.21 against the c$11.30 expected. This was a significant beat to earnings and revenue forecasts and demonstrates that the wobble in Q1 may have been temporary.  Nevertheless, Alphabet will have to get used to more competition in the digital ad space from the likes of Amazon and Facebook. Investments were a big factor in the quarter’s strong performance, delivering earnings of $2.7bn on the $9.9bn in net income.  

Beyond Meat may be very volatile over the next couple of days with the company set to report third quarter earnings after the close tonight. The company might report a profit but the biggest danger to the stock is the volume of new shares that will be unloaded on the market tomorrow when the lock-up ends. Shares have been battered down from the all-time highs and it remains heavily shorted, but investors who got in before the IPO are still minimum x4 on the deal with the stock at $100 versus $25 on IPO. If the earnings beat, you could end up with a lot of volume and volatility as lock-up stock gets dumped. 

Latest Markets.com News

US Election, Recession, Brexit: What’s in store for markets in 2020 H2?

Read More

US Election 2020: What happens to the US dollar with a Democrat clean sweep?

Read More

Stocks steady as pubs prepare to reopen

Read More

Risk assets rally on bumper US NFP jobs report

Read More

Blonde Money US Nonfarm Payrolls Preview

Read More

Stocks go up, cases go up, US jobs harder to call

Read More

US oil inventories preview: EIA data to confirm the biggest draw this year?

Read More

Stocks steady after Q2 boom, gold breaks higher, economic data uncertain

Read More

Short sellers triumph as Wirecard collapses – but who’s next?

Read More
Previous
Next

Join Markets.com to Experience Marketsx

Markets.com is the state-of-the-art trading platform provided by Markets.com. As part of the TradeTech Group, a constituent of Playtech, a FTSE 250 listed company, at Markets.com we have deep knowledge of the financial markets and an incredible range of resources to continually raise the bar in the world of financial trading.

Create Account

CySEC (EU)

  • Client’s funds are kept in segregated bank accounts
  • FSCS Investor Compensation up to EUR20,000
  • Negative Balance Protection

Products

  • CFD
  • Share Dealing
  • Strategy Builder

Markets.com, operated by Safecap Investments Limited (“Safecap”) Regulated by CySEC under License no. 092/08 and FSCA under Licence no. 43906.

FSC (GLOBAL)

  • Clients’ funds kept in segregated bank accounts
  • Electronic Verification
  • Negative Balance Protection

Products

  • CFD
  • Strategy Builder

Markets.com, operated by TradeTech Markets (BVI) Limited (“TTMBVI”) Regulated by the BVI Financial Services Commission (‘FSC’) under licence no. SIBA/L/14/1067.

FCA (UK)

  • Client’s funds are kept in segregated bank accounts
  • FSCS Investor Compensation up to GBP85,000
    *depending on criteria and eligibility
  • Negative Balance Protection

Products

  • CFD
  • Spread Bets
  • Strategy Builder

Markets.com operated by TradeTech Alpha Limited (“TTA”) Regulated by the Financial Conduct Authority (“FCA”) under licence number 607305.

ASIC (AU)

  • Clients’ funds kept in segregated bank accounts
  • Electronic Verification
  • Negative Balance Protection

Products

  • CFD

Markets.com, operated by Tradetech Markets (Australia) Pty Limited (‘TTMAU”) Holds Australian Financial Services Licence no. 424008 and is regulated in the provision of financial services by the Australian Securities and Investments Commission (“ASIC”).

FSCA (ZA)

  • Clients’ funds kept in segregated bank accounts
  • Negative Balance Protection

Products

  • CFD
  • Strategy Builder

Markets.com, operated by TradeTech Markets (South Africa) (Pty) Limited (“TTMSA”) Regulated by Financial Sector Conduct Authority (‘FSCA’) under the licence no. 46860.

Selecting one of these regulators will display the corresponding information across the entire website. If you would like to display information for a different regulator, please select it. For more information click here.