On Monday the PMI manufacturing index for November dropped .4 points to 55.3 but the ISM manufacturing index rose 1.6 points to 59.3. Construction spending for October declined .1 %. At the G20 summit, President Trump and China’s President Xi agreed to a 90 day trade truce and to keep tariffs at the current level, instead of raising them in January. However, for the first time since 2007 the yield on three and five year U.S. Treasury notes inverted. Historically, when short term rates rise to higher levels than longer terms, the risk of a recession is high. Nevertheless, markets rose strongly with the Dow Industrials closing up 287 points.
On Tuesday motor vehicle sales for November increased by 100,000 to an annualized rate of 17.4 million units. In a kind of delayed reaction to the prior day’s news of an inverted yield curve, markets tanked with the Dow Industrials losing 799 points, the S&P 500 declining 3.2% and the Nasdaq Composite dropping 3.8%.
On Wednesday markets were closed for observance of the death of former president George Bush.
On Thursday the ADP employment report for November came in at 179,000 vs 225,000 for the prior month. Jobless claims for the week ending December 1st fell by 4,000 to 231,000 while factory orders for October decreased by 2.1%. Nonfarm productivity for the third quarter rose 2.3% while unit labor costs rose .9%, and the ISM non-manufacturing index for November rose .4 points to 60.7. The EIA petroleum status report for the week ending November 30th saw crude oil inventory decrease 7.3 million barrels. Markets initially fell sharply on news that a top executive of the Chinese telecom equipment maker Huawei was arrested in Canada and faces extradition to the U.S. Later, the Wall Street Journal reported that the Federal Reserve is considering easing up on rate hikes after December and this sparked a rally. The Dow Industrials ended up closing 79 points lower.
On Friday non-farm payrolls for November rose 155,000 compared to the prior month’s 237,000 gain and lower than expectations. The unemployment rate remained unchanged at 3.7% and average hourly earnings rose .2%. Markets opened higher on the news, but then turned sharply lower. Now let’s take a look at some stocks.
Tesaro, Inc. (NASDAQ: TSRO) shares rallied on Monday after GlaxoSmithKline plc announced it will acquire Tesaro for $5.1 billion. GlaxoSmith desires to strengthen its pharmaceutical business, accelerating the build of its pipeline and commercial capability in oncology. Tesaro shares surged almost 59% on the news.
Tribune Media Company (NYSE: TRCO) shares rose on Monday by 9.9% after Nexstar Media Group agreed to acquire Tribune. Nexstar will acquire all outstanding shares of Tribune for $46.50 per share in a cash transaction valued at $6.4 billion. Nexstar will also assume all of Tribune’s outstanding debt.
Cronos Group Inc. (NASDAQ: CRON) shares jumped as high as 31% intraday on Monday after the company confirmed reports that it is in talks with Altria about a potential investment. Cronos said that no agreement has been reached and that there is no assurance it will happen.
Movado Group, Inc. (NYSE: MOV) shares surged by almost 15% on Tuesday after the company topped its third quarter financial results. For the quarter, Movado reported earnings per share of $1.18 on sales of $208 million. Analysts had forecast earnings per share of $1.12 on sales of $205 million.
Lululemon Athletica Inc. (NASDAQ: LULU) reported its third quarter financial results after market close on Thursday, earning 75 cents per share on revenue of $747 million. The company topped analysts’ estimates in both earnings and revenue, however, shares still dropped 4.9% after reporting.