By Anora Mahmudova and Carla Mozee, MarketWatch OPEC's Thursday
meeting in focus this week
NEW YORK (MarketWatch) -- U.S. stocks inched higher on Monday,
sending the benchmark S&P 500 index into record territory, as
the decision by China's central bank to ease monetary policy last
week continued to buoy global equity markets.
Equities in Asia rallied, while European stocks rose after
better-than-expected data in Germany.
The S&P 500 (SPX) was slightly higher, but it was still
enough to top its previous record close. The Dow Jones Industrial
Average (DJI) struggled to hold on to its modest gains and was
trading in negative territory.
Monday trading also saw small stocks outperform large-cap
stocks. The Russell 2000 (RUT) rose 0.7%, while the Nasdaq
Composite (RIXF) also was higher, thanks to a rally in
biotechnology sector stocks.
John Manley, chief equity strategist at Wells Fargo, cautioned
not to read too much into market moves this week, ahead of
Thanksgiving holiday.
Speaking about the market's run in 2014 and valuations, Manley
said that stocks are fairly priced given earnings expectations for
the S&P 500 next year are at $125-130 per share.
"Big bull markets end with irrationality - when all the people,
who lost out on the rally decide to join in. We do not see that
yet, as there is still a lot of cash on the sidelines," Manley
said.
The economic calendar is thin on Monday, but later in the week,
investors will receive a stack of updates on housing, inflation and
a revision in third-quarter gross domestic product for the U.S.
U.S. stocks ended Friday's session higher, guided by gains in
the materials sector after China moved to bolster its economy by
cutting interest rates.
Need to know: Relax, stocks will rise only 5% next year
OPEC spotlight: Energy stocks also rose ahead of Thursday's
meeting of the Organization of Petroleum Exporting Countries, where
members are facing calls to cut production to counteract the recent
slide in crude-oil prices. Ahead of Wall Street's open, light,
sweet crude futures for January delivery (CLF5) turned lower, but
remained above $76 a barrel, which until recently represented a
four-year low for the price of oil.
"Plenty of headwinds to OPEC action remain, but we see greater
prospects for either a stronger enforcement of the quota or an
outright cut of the quota," said Morgan Stanley commodity analysts
led by Adam Longson, in a Monday note.
A rising likelihood that a Monday deadline on an agreement to
curb Iran's nuclear program will be extended may factor into
decisions at OPEC, "but even last week, Libya called for stronger
enforcement of the existing 30 mmb/d quota, and most oil exporters
are calling for at least some action to settle oil markets," said
Morgan Stanley.
Stocks to watch:Tesla (TSLA) is in talks with German automaker
BMW about working together to develop batteries and collaborate
over light-weight parts, Tesla's chief executive Elon Musk told
German weekly Der Spiegel. Shares were slightly lower.
Apple Inc.'s (AAPL) price target at Susquehanna was raised to
$135 from $120. Shares were up 0.3% at $116.81.
Diversified industrial conglomerate United Technologies Corp.
(UTX) said Chairman and Chief Executive Louis Chenevert will
retire, effective immediately, after 22 years with the company.
United Technologies also affirmed its 2014 per-share earnings and
sales outlooks. Shares were slightly higher.
Trina Solar Ltd. (TSL) shares fell after the company posted flat
profit on revenue growth of 13% for the third quarter.
For more about today's movers, read our regular Movers &
Shakers column.
Other markets: European stocks got a bang out of the Germany's
IFO business-climate survey, and the Hang Seng and Shanghai
Composite indexes each leapt nearly 2% in a first chance to react
to China's rate cuts. Read Craig Stephen's column on whether
investors should buy into China's rate-move.
Gold futures (GCZ4) was mostly unchanged at $1,198 an ounce, and
the dollar(USDJPY) topped Yen118.
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