Wall Street Faces Pullback on Profit Taking Fears

October 29, 2019
Wall Street Faces Pullback on Profit Taking Fears

By Investors Hub

The major U.S. index futures are pointing to a lower opening on Tuesday, with stocks likely to give back ground after ending the previous session mostly higher.

Profit taking may contribute to initial weakness on Wall Street, as traders cash in on recent gains after the S&P 500 reached a new record closing high on Monday.

Trepidation ahead of the Federal Reserve?s monetary policy announcement on Wednesday may also inspire some traders to look for safer havens.

The Fed is widely expected to cut interest rates by another quarter point, although traders may wait to see if the central bank follows through and provides any clues about future rate cuts.

A negative reaction to the latest batch of earnings news may also weigh on the markets, with Google parent Alphabet (GOOGL) moving notably lower in pre-market trading after reporting its third quarter results.

After the close of trading on Monday, Alphabet reported third quarter earnings that missed analyst estimates, hurt largely by higher operating costs.

On the other hand, General Motors (GM) may see initial strength after reporting better than expected third quarter earnings, although the auto giant also lowered its full-year earnings guidance.

Extending the upward move seen last Friday, stocks moved mostly higher during the trading session on Monday. With the continued advance, the S&P 500 reached a record closing high and the Nasdaq moved within striking distance of a new record high.

The major averages ended the session off their best levels of the day but still firmly in positive territory. While the S&P 500 climbed 16.87 points or 0.6 percent to 3,039.42, the Nasdaq jumped 82.87 points or 1 percent to 8,325.99 and the Dow rose 132.66 points or 0.5 percent to 27,090.72.

The strength on Wall Street came amid continued optimism about U.S.-China trade talks as well as news that the European Union has granted the U.K.’s request for a Brexit deadline extension.

The move by the EU, which delays Brexit until January 31st, was widely expected but still removes the risk of a damaging no-deal split on Thursday.

News on the merger-and-acquisition from also generated some buying interest, with shares of Tiffany (TIF) soaring after French luxury goods maker LVMH confirmed it is talks to acquire the jeweler.

Reports suggest LVMH’s bid would value Tiffany at about $120 per share or $14.5 billion. Tiffany ended last Friday’s trading at $98.55 a share.

Liberty Property Trust (LPT) also moved sharply higher after agreeing to be acquired by rival commercial real estate firm Prologis (PLD) in an all-stock deal valued at $12.6 billion.

Shares of Fitbit (FIT) also spiked in recent trading after a report from Reuters said Google parent Alphabet (GOOGL) has offered to acquire the wearable device maker.

The end of a 40-day strike at auto giant General Motors (GM) added to the positive sentiment, as members of the United Auto Workers union approved a new four-year contract.

Steel stocks showed a substantial move to the upside on the day, driving the NYSE Arca Steel Index up by 1.9 percent to its best closing level in well over a month.

Considerable strength was also visible among software stocks, as reflected by the 1.8 percent jump by the Dow Jones U.S. Software Index.

Software giant Microsoft (MSFT) posted a strong gain after beating out Amazon (AMZN) for a $10 billion cloud computing contract with the Pentagon.

Biotechnology and semiconductor stocks also saw significant strength on the day, contributing to the notable advance by the tech-heavy Nasdaq.

While financial and healthcare stocks also moved to the upside on the day, notable weakness emerged among gold, natural gas and utilities stocks.

Dipo Olowookere

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

Mr Olowookere can be reached via [email protected]

Leave a Reply

airing of InterswitchSPAK 2.0
Previous Story

InterswitchSPAK 2.0 Hits TV Screen November 2

European Stocks Close Mixed as UK Lawmakers Reject PM's Snap Poll Plan
Next Story

European Stocks Close Mixed as UK Lawmakers Reject PM’s Snap Poll Plan

Latest from Economy