Stocks Reach New Heights Following Israel Cease-Fire Agreement

The S&P 500 increased by 0.6%, while the Nasdaq 100 also climbed by 0.6%. The Dow Jones Industrial Average saw a rise of 0.3%.

In a significant turn, stocks soared to record levels as investors chose to overlook former President Donald Trump's tariff proposals. This surge in the market was largely driven by the easing of geopolitical tensions after a cease-fire was agreed upon between Israel and Hezbollah.

The stock market has now gained for seven consecutive sessions, with the S&P 500 marking its 52nd record high this year alone. The positive trend continued shortly after oil futures settled, when the U.S. confirmed that a deal had been reached between Israel and the Lebanese militant group.

In late trading, Dell Technologies Inc. reported disappointing sales figures, while HP Inc. and CrowdStrike Holdings Inc. offered lackluster forecasts for the future. Despite this, Wall Street appeared unfazed by Trump's announcement of additional tariffs targeting the U.S.'s principal trading partners.

Shares of major software companies received a boost from Microsoft Corp., which contributed to the overall rally in tech stocks less vulnerable to tariff impacts. Conversely, automakers, such as General Motors Corp. and Ford Motor Co., experienced declines due to their business connections in regions like Mexico and China. Notably, a decrease in equity volatility indicated a prevailing calm in the market.

According to Andrew Brenner, a market strategist at NatAlliance Securities, many view tariffs as a negotiating tool rather than a genuine threat to the economy. He noted, "We still see tariffs as more strategizing and think the bark will be worse than the bite."

As previously mentioned, the S&P 500 rose by 0.6%, the Nasdaq 100 increased by 0.6%, and the Dow Jones increased by 0.3% at the close.

The yield on U.S. 10-year Treasury notes saw a slight rise, advancing two basis points to reach 4.30%. Additionally, a dollar index gained 0.2%, whereas both the Mexican peso and Canadian dollar faced declines.

Dennis DeBusschere from 22V Research commented that Trump's connection of tariffs to drugs and immigration, rather than strictly to trade or economic policies, indicates to investors that this may be a negotiating tactic rather than a genuine strategy. Kenny Polcari of SlateStone Wealth echoed this sentiment, stating, "It was Trump ‘following through’ on his campaign promises.”

While stocks enjoyed an overall rise, the bond market's response was muted after marking its second-largest gain this year. Ian Lyngen at BMO Capital Markets suggested that the restrained reaction in Treasury yields could be attributed to the market already factoring in renewed tariff discussions and the recognition that raised tariffs tend to have a one-off effect on inflation rates.

The S&P 500 index has spiked more than 25% throughout 2024 and is on course for a second consecutive year of over 20% returns, a feat accomplished only four times in the last century. Bankim Chadha from Deutsche Bank AG forecasts the index will reach 7,000 points by the end of next year, positioning him as one of the most optimistic strategists on Wall Street about further stock market gains.

Chadha and his team expressed in a recent note, "We see steady robust momentum continuing into 2025, with earnings-per-share growth in the low double digits." Meanwhile, Savita Subramanian of Bank of America is predicting another year of double-digit growth for the S&P 500 in 2025 but notes that there are even greater opportunities outside the index.
Her year-end target for the S&P 500 stands at 6,666, highlighting firms with solid cash return potential that are closely linked to the U.S. economy. She currently favors sectors such as financials, consumer discretionary, materials, real estate, and utilities.

Goldman Sachs strategists are urging investors to continue favoring U.S. stocks but recommend diversification to counter the fact that nearly half of the S&P 500's increase in 2024 can be attributed to the "Magnificent Seven" major tech companies.

Peter Oppenheimer from Goldman emphasized that while a focus on U.S. equities is still justified due to robust economic and earnings prospects for 2025, the high concentration and valuation in the stock market merit a more diversified approach.

Corporate Developments

• Urban Outfitters Inc. reported strong sales growth in the third quarter, with the Anthropologie brand leading the charge.

• Nordstrom Inc. adjusted its annual sales forecast upwards, spurred by better than expected performance from its off-price and flagship stores, a move that might influence its board to engage the founding family in discussions about taking Nordstrom private.

• Amgen Inc.'s latest obesity treatment showed limited advantages over competitors and was noted for a high rate of gastrointestinal side effects.

• Kohl’s Corp. revised its full-year sales expectations downward, indicating challenges in its turnaround strategies amid a tough retail backdrop.

• Dick’s Sporting Goods Inc. increased its full-year sales outlook after achieving strong results for the back-to-school season, driven by rising demand for sports equipment.

• Best Buy Co. reduced its sales guidance for the year, citing weak demand for electronics, raising concerns about its turnaround efforts.

• JM Smucker Co. raised its earnings forecast due to strong performance from its popular Uncrustables sandwiches, compensating for slower sales from the recently acquired Hostess brand.

Upcoming Events

• U.S. PCE, initial jobless claims, and GDP reports are due on Wednesday.

• Eurozone consumer confidence analysis will be released on Thursday.

• Markets will be closed for the U.S. Thanksgiving holiday on Thursday.

• Eurozone CPI figures will be available on Friday.

• The European Central Bank will release a consumer expectations survey for October on Friday.

• "Black Friday" will mark the start of the holiday shopping season in the U.S.

Stocks, Market, Investors, Tariffs, Ceasefire