Market Perspective for October 1, 2018

The Dow Jones Industrial Average led major indexes on Monday as General Electric (GE) announced the departure of CEO John Flannery after only 13 months at the helm. Incoming CEO Lawrence Culp was CEO of Danaher Corp from 2000 to 2014. He has served on GE’s board of directors since February. GE rallied 7.09 percent on Monday, the DJIA 0.73 percent.

Tesla (TSLA) reached a settlement with the SEC over the weekend. Musk will pay a $20 million fine and cannot serve on the board for three years, but he can remain CEO. Tesla gained 17.35 percent on Monday.

Crude oil topped $75 a barrel for the first time since early July today. It hasn’t sustained a move above $75 since before 2014, when it traded for more than $100 a barrel. Natural gas climbed past $3.10 for the first time since February. Energy was the best performing sector. SPDR Energy (XLE) gained 1.39 percent.

Manufacturing PMIs were solid for September, though PMIs in Europe and Asia softened. September auto sales will be out on Tuesday. Analysts see weekly unemployment claims holding steady around 215,000. The big employment report will be out on Friday. Average hourly earnings are forecast to rise 0.3 percent. Federal Reserve officials will give their first public comments since hiking interest rates last week.

The U.S. Dollar Index rose after the United States struck a deal with Canada that preserves the NAFTA framework of a North American free trade zone. One important provision in the new deal will require increased auto production in North America, which will benefit all three countries to some degree. Additionally, Canada has agreed to a clause that limits its ability to sign a free trade agreement with a non-market economy, such as China.

Earnings season won’t kick off in earnest for a few more weeks, but Pepsi (PEP) will report on Tuesday, followed by Paychex (PAYX), Lennar (LEN) and Costco (COST) later in the week.

 

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