Stocks opened higher on the heels of solid earnings reports and momentum from the previous two sessions. The major averages began to lose some steam in early morning trading, until an optimistic tweet from President Trump about trade talks with China renewed their strength. The market is extending its rally to a third day and although it has lifted out of correction territory it is still well off its all-time highs. Next up, investors await Apple's (AAPL) earnings report after the market close, knowing the results from the most-valuable of tech's big names can either short-circuit the rally or give it a charge for a fourth day.
ECONOMIC EVENTS: In the U.S., nonfarm productivity growth slowed to a 2.2% rate in Q3, a little weaker than analysts forecast. Initial jobless claims fell 2,000 to 214,000 in the week ended October 27. Markit's manufacturing index edged up 0.1 tick to 55.7 in the final October print, though that was down a bit from the 55.9 preliminary reading. The ISM manufacturing index dropped 2.1 points to 57.7 in October, which was weaker than forecast. Construction spending was unchanged in September after rising 0.8% in August.
COMPANY NEWS: Shares of DowDuPont (DWDP) are up 7% after the company reported better than expected third quarter earnings, announced a $3B stock buyback program and raised its cost synergies target to $3.6B. DowDuPont noted that it remains on track to complete its intended separation into three companies, beginning with Materials Science on April 1, followed by Agriculture and Specialty Products on June 1.
Shares of Teva (TEVA) are rising 12.5% after the drugmaker reported better than expected third quarter earnings and raised its profit view for the fiscal year.
In M&A news, Encana (ECA) announced an agreement to acquire all of the outstanding shares of Newfield Exploration (NFX) in an all-stock transaction valued at approximately $5.5B. In addition, Encana will assume $2.2B of Newfield net debt. While Encana shares have fallen over 16% following the news, Raymond James analyst Chris Cox views the selloff as an overreaction, stating that the deal adds a "third leg to the stool," with the SCOOP/STACK joining the Permian and Montney as "meaningful core plays" for Encana.
MAJOR MOVERS: Among the noteworthy gainers was Acadia (ACHC), which rose 6% after the New York Post reported that KKR (KKR) is close to winning the auction for Acadia. Also higher were Fitbit (FIT) and Hilton Grand Vacations (HGV), which gained a respective 25% and 15% after reporting quarterly results.
Among the notable losers were Wayfair (W) and Hanesbrands (HBI), which fell 12% and 7.5%, respectively, after reporting quarterly results.
INDEXES: Near midday, the Dow was up 205.62, or 0.82%, to 25,321.38, the Nasdaq was up 73.06, or 1.0%, to 7,378.96, and the S&P 500 was up 17.86, or 0.66%, to 2,729.60.
