Traders and financial professionals work on the floor of the New York Stock Exchange (NYSE) at the opening hour of August 19, 2019 in New York City.
Drew Angerer | Getty Images
As November rolls out, stocks should continue to make gains in one of the best months of the year for the market, and it is very likely that Dow will join other indexes soon to set new highs.
The S&P 500 and Nasdaq both traded on record territory over the last trading week, bolstered by some better economic news, a better-than-expected earnings season, and hope the trade talks will soon lead to a first-phase agreement between the United States and China. On Friday, China said it reached an agreement with the United States in principle after a high-level telephone conversation with dealers.
Analysts say stocks can follow seasonal trends higher, preventing problems in trading conversations. The market begins historically for the best three months of the year, and it has a few catalysts in the week ahead. There are a number of financial reports, the most important being the ISM services PMI on Tuesday.
Third quarter earnings season continues, with around 80 S&P 500 companies reporting, including media companies Disney and News Corp. and chipmaker Qualcomm.
The top months ahead for stocks
November is the third best month for the S&P 500, which has been higher two-thirds of the time since World War II with an average gain of 1
"Investors are probably too skeptical of the impact of Brexit, the US-China trade talks and you are too skeptical that the market can move forward," said Sam Stovall, chief investment strategist at CFRA. Many strategists say that efforts by Democrats to introduce Trump are not is hurting stock prices at the moment, but it could be if there is any development that would call into question his re-election.
"I think November and December are pretty much going to focus on the emotional trend right now. The market tells us that it wants to go higher, "Stovall said.
Of the more than 350 S&P companies that have reported earnings, 76% reported revenue estimates, according to I / B / E / S data from Refinitiv. is down about 0.8% for the quarter, based on companies that have already reported and projected.
"This will be the 31st consecutive quarter where actual factors exceed estimates, but as much as revenue comes in better for the quarter, they are down compared to the fourth quarter and 2020. That's not good, "Stovall said. But he said stocks could be lifted toward the end of the trade war, the impact of lowered interest rates and a possible White House tax cut.
" I think, because the market is doing so well, it can tell us We underestimate the growth of the future. Prices lead to basic conditions, "he said.
S&P and Nasdaq rose to record levels Friday after the October labor report showed that non-farm profitability grew by 128,000, much larger than expected. The number was weaker due to the strike against General Motors, but not as weak as feared.
The Fed also added positive sentiment with a rate cut on Wednesday, but the central bank went out of its way to signal a break in policy.
"The rally is definitely expanding. The measured move is 3200 on the S&P 500 at year-end. In the last two sessions we tried again and spent some time over the 3,025 area. Today's move showed some necessary force, according to a Goldilocks work report: It had something for everyone, not too strong to have the Fed as a headwind, but strong enough to keep the recession away, says Scott Redler, partner with T3Live.com. "Today's move gives the bull power."
Redler said Apple's performance this week was a big boost for sentiment. It ended the week up 3.7%, at a new high, after strong earnings. "Dealers love when Apple goes," he said.
The S&P 500 was higher for a fourth consecutive week, the longest winning series since March. S&P ended the week at 3,066, up 1.5% for the week, while Nasdaq closed at a record 8,386, up 1.7% for the week. The Dow gained 1.4% for the week, lifted by a 301-point bounce Friday. It ended the week at 27,347, 0.2% throughout at 27,398.
Historically, industries have had the best gains on average in November, right back to 1995. Industrial shares have been up an average of 2.9% , followed by materials, up 2.7%, consumer discretion, up 2.6% and then technology, up 2.4%, according to CFRA data.
"The cliché is that everyone is focused on the outbreak. I think the most important technical event that has evolved over several weeks has really been this rotation against cyclists," said Robert Sluymer, technical strategist at Fundstrat.
He said he expects the Dow to come to new highlights soon. "We believe the market is strong through the end of the year and well into 2020. We continue to believe that the market cycle is low developed by the end of 2018. This is the next stage in the beef market," he said.
What do bonds say?
The bond market did not respond in the same way as stocks on the number of jobs. Yields were a little higher Friday, but remained close to or below the level they were just before the Fed cut rates on Wednesday.
"We're actually down on the week. It tells you what the bond market thinks about the financial landscape, especially with the job report. I know there's a lot of enthusiasm about it," said Peter Boockvar, chief of investment managers at Bleakley Advisory Group. "The bond market still sends a completely different message than the stock market optimism. The pace of job growth is still declining, and this figure will be revised several times. Everything points to a slowdown in growth."  The 10-year Treasury yield was 1.73% on Friday afternoon, and it had been at 1.80% at the end of the week before.
"I think there's some moderation from the sell-out we saw last week. The Fed was pretty much in line with what people expected," said Ben Jeffery, an interest rate strategist at BMO. "I think stocks are looking at what The Fed is comfortable leaving interest rates on hold, so many fears of recession are a little excessive. You can make the argument that the bond market is less convinced. "
However, Stovall said it is positive for equities when the 10-year return is lower than the return on the S&P 500, now about 2%.
" Say another positive for equities is historically when the dividend yield on the S&P 500 has exceeded the return at the turn of the year. The average 12-month return for S&P has exceeded 22%, "he said.
Weekly Future Calendar
Revenue : Occidental Petroleum, Uber, Prudential Financial, Shake Shack, Tenet Healthcare, Marriott, Consolidated Edison, Bausch Health, Groupon, Ryanair, Hertz Global, Tenet Healthcare, Under Armor
10:00 Factory Orders  14:00 Senior Loan Officer Survey
Revenue: Allergan, Becton Dickinson, Regeneron, Mylan, Arconic, Tapestry, Ratler Midstream, Hersha Hospitality, Caesars, MBIA, WW International, Whiting Petroleum, Assurant, Devon Energy, Virtu Financial, Diamondback Energy , Microchip Tech, Match Group
08:00 Richmond Fed President Thomas Barkin
08:30 International Trade
09:45 PMI Services
10:00 ISM Non-Manufacturing
12:40 pm Dallas Fe d President Rob Kaplan
06:00 p.m. Minneapolis Fed President Neal Kashkari
Result : Qualcomm, CVS Health, Baidu, Wendy & # 39; s, Humana, Capri Holdings, Expedia, Adidas, Softbank, TripAdvisor, Square, Hostess Brands, Valvoline, Elanco Animal Health, Liberty Global, AXA Equitable, IAC / Interactive, Papa John & # 39; s
08:00 Chicago Fed President Charles Evans
08:30 Productivity and Costs  09:30 New York Fed President John Williams
15:15 Philadelphia Fed President Patrick Harker
Revenue: Disney, News Corp. , Activision Blizzard, Zillow, Monster Beverage, Booking Holdings, Toyota, Air Products, AmerisourceBergen, Cardinal Health, Johnson Controls, Keurig Dr. Pepper, Teva Pharma, Norwegian Cruise Line, Discovery, NRG Energy, Ralph Lauren, Zoetis, Tradeweb Markets, Sturm Ruger, Cloudfare, Dropbox
08:30 Initial claims
1: 0 5.00 Dallas Fed President Kaplan
03:00 p.m. Consumer Credit
7:10 p.m. Atlanta Fed President Raphael Bostic
Revenue : Allianz, Ameren, Duke Energy, Honda
10:00 Consumer Sentiment
11:45 am San Francisco Fed President Mary Daly
20:00 Fed Governor Lael Brainard