The Dow Jones Industrial Average and Nasdaq were on track to close at records on Monday, Oct. 16, as gains in crude oil boosted the energy sector.
The Dow was up 0.25% and was trading less than 100 points from 23,000, a level it has never touched before. The S&P 500 gained 0.11%, and the Nasdaq increased 0.17%.
Any gains for the Dow and Nasdaq during Monday's session would put the two at new records. The Dow matched a previous record and the Nasdaq topped a new all-time high on Friday, Oct. 13.
Crude oil prices rallied on Monday as the potential for conflict in Iraq threatened to cut off exports. Reports indicated Iraqi forces have descended upon Kirkuk, a major oil-producing region in Iraq. The area had been occupied by Kurdish fighters. Troubles in the region have risen since a referendum in with the Kurds voted for independence.
Iraq is a member of the Organization of the Petroleum Exporting Countries, a cartel that has agreed to limit production to address a global supply-demand imbalance.
Prices were also higher after President Donald Trump refused to certify that Iran was complying with a nuclear agreement. Trump also called for new sanctions against Iran. Previous sanctions had taken roughly one million barrels of oil per day out of global supply.
West Texas Intermediate crude oil rose 0.9% to $51.91 a barrel on Monday.
The energy sector was the best performer on Monday. Major oil companies were higher, including Chevron Corp. (CVX - Get Report) , Exxon Mobil Corp. (XOM - Get Report) , ConocoPhillips (COP - Get Report) , PetroChina Co. Ltd. (PTR - Get Report) , Total SA (TOT - Get Report) , BP PLC (BP - Get Report) and Statoil ASA (STO) . The Energy Select Sector SPDR ETF (XLE - Get Report) increased 0.5%.
Dow component Apple Inc. (AAPL - Get Report) added 1.6% after KeyBanc Capital upgraded its rating on the tech giant to overweight from sector weight, reversing a downgrade in June. Analyst Andy Hargreaves is optimistic over Apple's turn to "subscription-like qualities rather than a regular hardware business" including growth in its App Store. The firm had downgraded Apple midyear as growth in iPhone sales slowed.
Drug stocks were lower on Monday after Trump went after the industry. In comments at the White House, Trump said health care companies were "getting away with murder" and that drug prices were "out of control."
Insurance stocks such as UnitedHealth Group Inc. (UNH - Get Report) and Aetna Inc. (AET) slumped last week after Trump made his biggest move yet to dismantle the Affordable Care Act -- the Department of Health and Human Services announced that it would cut off subsidies to health insurers under the Obama-era Affordable Care Act.
Drugmakers such as Gilead Sciences Inc. (GILD - Get Report) , Pfizer Inc. (PFE - Get Report) , Amgen Inc. (AMGN - Get Report) , Bristol-Myers Squibb Co. (BMY - Get Report) and GlaxoSmithKline PLC (GSK - Get Report) were lower on Monday.
Federal Reserve Chair Janet Yellen boosted speculation the central bank could raise interest rates for a third time in 2017 in comments over the weekend. Despite persistently low inflation, the U.S. economy is in strong shape, Yellen said at a Group of 30 conference on Sunday, hinting that the Fed's third interest rate hike this year could come in December as many have predicted.
"Economic activity in the United States has been growing moderately so far this year, and the labor market has continued to strengthen," Yellen said, noting that the impact from hurricanes is probably ephemeral. "The ongoing strength of the economy will warrant gradual increases" in interest rates, she added.
Yellen also forecast that soft inflation readings would not persist and higher inflation would come next year on the "ongoing strengthening of labor markets."
Manufacturing activity in the New York region hit a three-year high in October. The Empire State manufacturing index rose to 30.2 this month from 24.4 in September, according to the New York Federal Reserve. Optimism improved, while new orders fell.
Viacom Inc. (VIAB - Get Report) and Charter Communications Inc. (CHTR - Get Report) agreed on a short-term extension of their renewal deadline, a source familiar with the matter told Reuters, as the companies aim to avoid the immediate blackout of Viacom networks. If no deal is reached, 16.6 million subscribers of Charter's Spectrum service will lose Viacom's networks, such as Comedy Central, MTV and Nickelodeon, Reuters noted.
Viacom and Charter are working to "reach a mutually beneficial deal," the source said. Viacom stands to lose $760 million, or about 16%, of its annual affiliate revenue if an agreement isn't reached, said an analyst at Gabelli & Co, Viacom's second-largest voting shareholder.
It's a busy week of earnings. Netflix Inc. (NFLX - Get Report) will report after the bell Monday, while Goldman Sachs Group Inc. (GS - Get Report) , Harley-Davidson Inc. (HOG - Get Report) , Johnson & Johnson (JNJ - Get Report) , Morgan Stanley (MS - Get Report) and UnitedHealth Group Inc. (UNH - Get Report) are set for Tuesday, Oct. 17. Other earnings of note this week include Alcoa Corp. (AA - Get Report) , American Express Co. (AXP - Get Report) , Verizon Communications Inc. (VZ - Get Report) , General Electric Co. (GE - Get Report) and Schlumberger Ltd. (SLB - Get Report) .
Just 6% of S&P 500 companies have reported earnings so far, the majority of which have bested profit and sales estimates. Analysts anticipate blended earnings growth of 4.1% in the third quarter, or 2% excluding energy, according to Thomson Reuters estimates. Revenue is expected to rise by 4.3%.
"U.S. corporate earnings are forecasted to decelerate from earlier this year as the third-quarter reporting season gets underway," Omar Aguilar, chief investment officer of equities at Charles Schwab Investment Management, wrote in a note. "Homebuilder and insurance company results are likely to reflect the aftereffects of hurricanes Harvey and Irma, while large-cap multinational companies with significant overseas operations may have benefited from U.S. dollar weakness during the quarter."
Exelixis Inc. (EXEL - Get Report) surged nearly 25% after the Food and Drug Administration granted priority review status for its supplemental New Drug Application for a kidney cancer treatment. The drug is for untreated advanced renal cell carcinoma. The FDA based its approval on mid-stage trial results.
Sears Holdings Corp. (SHLD) plummeted almost 13% on Monday after announcing that Fairholme Capital Management's Bruce Berkowitz was stepping down from the board of directors at the end of October. Berkowitz acts as chief investment officer at Fairholme. The investment firm was Sears' second-largest shareholders as of the end of June.
Updated from 1:15 p.m. ET, Oct. 16.
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