Updated from 10:12 a.m. ET, Monday, Aug. 14.
U.S. stocks rallied on Monday, Aug. 14, as investors looked beyond a standoff with North Korea and rediscovered their appetite for riskier assets.
The Dow Jones Industrial Average was up 0.68%, the S&P 500 gained 1% and the Nasdaq added 1.2%.
Markets reacted poorly last week as tensions escalated between the U.S. and the Asian dictatorship, which is developing nuclear weapons. President Donald Trump warned of "fire and fury like the world has never seen" if North Korea continued to issue threats; Kim Jong-un's government responded that it was assessing a missile attack on U.S. territory Guam.
The aggressive rhetoric helped snap a nine-day stretch of record closes on the Dow Jones Industrial Average, while the S&P 500 had its worst weekly loss since March 24. European indexes also sold off.
The Pentagon's top military officer, Chairman of the Joint Chiefs of Staff Gen. Joe Dunford, backs a diplomatic solution to the standoff.
"As a military leader, I have to make sure that the president does have viable military options in the event that the diplomatic and economic pressurization campaign fails," said Dunford. "Even as we develop those options, we are mindful of the consequences of executing those options, and that makes us have more of a sense of urgency to make sure that we're doing everything we absolutely can to support Secretary [of State Rex] Tillerson's current path."
On Friday evening, Trump announced a planned news conference for Monday afternoon, though it is unclear whether North Korea will be discussed. Geopolitical tensions could pressure markets further in the coming week if Trump's rhetoric continues to intensify. On Friday morning, he tweeted that the U.S. military was "locked and loaded" in case of "unwise" actions by North Korea.
"That's what investors like the least," Bodhi Ganguli, lead economist at Dun & Bradstreet, told TheStreet. "Uncertainty of a kind that you cannot actually predict anything out of it at all."
The economic calendar in the U.S. on Monday is bare but grows busier later. Retail sales for July are released Tuesday and should give an indication of how consumers are spending in the first month of the third quarter. Economists surveyed by FactSet anticipate sales will increase 0.4% in July, reversing a 0.2% decline in June.
The Empire State Manufacturing Survey and the housing market index for August, import and export prices for July, and business inventories for June will also be released on Tuesday; housing starts for July, and the Federal Open Market Committee's minutes from its late July meeting on Wednesday; the Philadelphia Fed Business Outlook Survey for August, and industrial production for July on Thursday; and a preliminary read on consumer sentiment for August on Friday.
VF Corp. (VFC) rose more than 2% after announcing it will acquire workwear brand Williamson-Dickie Mfg. Co. in an all-cash deal worth $820 million. The latest acquisition, which houses brands such as Dickies, will fit comfortably with other VF labels such as The North Face and Wrangler. VF Corp. also raised its full-year guidance to earnings of $2.96 a share on revenue of $11.85 billion. The company previously target $2.94 a share on $11.65 billion.
JD.com (JD) moved lower despite a better-than-expected quarter on its top- and bottom-line. Earnings of 10 cents a share beat estimates by 2 cents. Revenue surged 41.6% to $13.75 billion, coming in higher than consensus by $450 million.
Canadian Solar (CSIQ) also exceeded analysts' estimates. A net loss of 15 cents a share was a penny narrower than expected. Revenue declined by 14.1% to $692.37 million, but topped expectations by $70 million.
VMware Inc. (VMW) rose 6% after issuing preliminary second-quarter results and increasing its fiscal 2018 guidance. The company anticipates second-quarter revenue between $1.89 billion and $1.9 billion, representing an 11.9% to 12.6% year-over-year increase. Analysts anticipate $1.86 billion in sales. For fiscal 2018, VMware expected sales to rise by 10% to $7.83 billion, also above consensus of $1.86 billion. VMware also authorized an additional $1 billion in stock buybacks, adding to the $1.2 billion already in its repurchase program.
Sysco Corp. (SYY) reported a better-than-expected fourth quarter. Earnings of 72 cents a share beat by a penny, while revenue increased 5.5% to $14.4 billion, edging out consensus by $60 million. The foodservice distribution company reported a 3.4% increase in comparable sales. Gross margins rose by 80 basis points to 19.14%.
Procter & Gamble Co. (PG) was slightly higher after calling on shareholders to back up its board directors at an upcoming annual meeting and block a board seat sought by activist investor Nelson Peltz.
"You are being asked to choose between a Board and management team that are successfully executing a proven plan to build a better and more valuable company and Mr. Peltz, who has not offered any new, actionable ideas to deliver value beyond the plan that we already have in place," the company wrote in a letter.
Procter & Gamble said Peltz was pushing for a board seat to "satisfy his own agenda" and that the company would not benefit from "change for the sake of change." Shareholders will cast their vote at the annual meeting on Oct. 10.
Nvidia Inc. (NVDA) was among the top performers in the tech space after Canaccord Genuity upped its price target to $190 from $180, above its current trading level of around $162. The stock had tumbled on Friday even after the chipmaker reported higher profit and sales than anticipated. Nvidia has been vulnerable to selloffs since surging more than 50% since the beginning of the year.
Other tech stocks on the rise on Monday included Apple Inc. (AAPL) , Amazon.com Inc. (AMZN) , Microsoft Corp. (MSFT) , and Alphabet Inc. (GOOGL) . The Technology Select Sector SPDR ETF (XLK) increased 1.4%.
Crude oil prices turned higher on Monday, though concerns over weaker demand in China and growing production in the U.S. kept a cap on gains. The National Bureau of Statistics showed that Chinese refineries processed 10.71 million barrels per day in July. That was 500,000 barrels per day lower than in June and marked its lowest level since September 2016, according to Reuters.
Meanwhile, U.S. production continues to climb. On Friday, a weekly read showed U.S. rigs drilling for oil increased by 3 to 768 in the past week, according to Baker Hughes. The increase reversed a small decline a week earlier.
Global oversupply remains a risk to commodities markets. Organization of Petroleum Exporting Countries' combined production increased by 173,000 barrels per day to nearly 32.9 million barrels in July. The cartel previously made a pact to limit output, though there are no restrictions on some members such as Libya.
Violence and chaos erupted in Charlottesville, Va. over the weekend as white nationalists and protesters clashed. Events escalated when a car rammed into a protesting crowd, killing one and injuring at least 19 others. James Alex Fields, Jr. has been charged with second-degree murder in the death of 32-year-old Heather Heyer and was denied bail. Virginia Governor Terry McAuliffe declared a state of emergency.
President Trump denounced the violence in Charlottesville in a statement on Saturday but was condemned even by lawmakers from his own party for failing to criticize white nationalists specifically. In comments to the press, Trump said, "We condemn in the strongest possible terms this egregious display of hatred, bigotry and violence, on many sides."
Photos of a white supremacist rally at the University of Virginia on Friday night flooded social media, inflamed racial tensions, and drew anti-racism protesters on Friday and Saturday. The Friday night gathering was in protest of the planned removal of a Robert E. Lee statue commemorating his leadership of the Confederate army during the Civil War.
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