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Stocks Jump: NAFTA Becomes USMCA; GE, Tesla Surge On Shake-Ups

Stocks launched the fourth quarter on a positive note Monday, as a last-minute U.S.-Canada trade accord bolstered global investor sentiment.




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General Electric (GE) and Tesla (TSLA) staked out early leads following management shakeups. Techs swung higher as Apple (AAPL), Amazon.com (AMZN) and Netflix (NFLX) posted strong early gains. Pot stocks rallied behind Canada-based Tilray (TLRY). Chip stocks showed early strength, with Nvidia (NVDA), Advanced Micro Devices (AMD) and ASML Holdings (ASML) knocking out early gains, although Intel (INTC) fell after an analyst downgrade.

The Dow Jones industrial average and Nasdaq Composite each jumped 0.7% at the starting bell. The S&P 500 popped 0.6%. American Express (AXP) ran at the head of the Dow. Tesla easily topped the Nasdaq 100 and GE ran to a wide lead among S&P 500 stocks.

U.S. stocks and global stock markets gained after Canada agreed, just ahead of a midnight Sunday deadline, to join a trade agreement fashioned last month between the U.S. and Mexico. The accord marked a success for President Donald Trump’s effort to overhaul the North American Trade Agreement, which is now the the United States-Mexico-Canada Agreement or USMCA. Meeting the deadline permits passage of the deal through the U.S. Congress ahead of a change of presidential power in Mexico set for December.

Trump tweeted early Monday that the arrangement  “…solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduces Trade Barriers to the U.S. and will bring all three Great Nations together in competition with the rest of the world.”

Manufacturing PMI Unexpectedly Rises In September

Markit’s September Purchasing Manager’s Index improved to 55.6, up from a slowdown to 54.7 in August. A rise in production and new orders helped counter economist expectations for a slip to 54.5.

The Institute For Supply Management’s PMI rolls out at 10 a.m. ET, along with construction spending numbers for August from the Commerce Department. Minneapolis Federal Reserve President Neel Kashkari speaks at 11 a.m. ET. President Eric Rosengren of the Boston Federal Reserve Bank speaks at 12:15 p.m. ET.

Apple, FANG Stocks Active; Facebook Slowed By Data Breach

Apple, Amazon.com, Netflix and Google-parent Alphabet (GOOGL) all rumbled higher in early action.

Apple muscled up 1.5%, extending the rebound from its 10-week line begun last week. Shares were extended beyond a buy range, which ran to roughly 227.46. Investors may have another shot at the stock before long, the stock is also working on a possible base pattern, with a potential buy point at 229.77.

Netflix outpaced its FANG stock peers, up 2.3% just after the open. The stock is 10% below a buy point at 423.30, as it climbs the right side of a three-month cup base.

Facebook (FB) was the FANG stock slowpoke, up 0.7% in opening trade. Ireland’s Data Protection Commission, the lead privacy regulator for Facebook in Europe, on Saturday requested more information related to a user data breach announced on Friday. Under Europe’s GDPR consumer data protection law, Facebook could face a fine of as much as $1.63 billion if it is found to have not adequately protected data.

On IBD’s Leaderboard list, Roku (ROKU) popped 2% ahead of the open. The maker of set-top recording devices consolidated for the first seven months of the year, but ended Friday near new highs, extended after clearing an alternate buy point at 60.75.

Tesla, Tilray, GE Rocket; Intel Downgraded

Tesla spiked more than 15% in opening trade. The Securities and Exchange Commission reached a deal that would remove Elon Musk as Tesla’s chairman, but leave him in the chief executive chair. The SEC had sued over Musk’s Twitter messages for misleading investors by claiming he had secured the private funding needed in order to take the company private.

Tesla shares have been consolidating, struggling below 10-week support since mid-August. The stock plunged 14% Friday, down 32% from an Aug. 7 high after Musk’s infamous “funding secured” tweet.

General Electric spiked 14% after announcing its board had replaced Chief Executive John Flannery with Lawrence Culp, after a series of GE power plant turbine failures sent the company into turmoil over the past two weeks. GE shares lost 7% last week, leaving them down 65% from a December 2016 high.

British Columbia-based Tilray launched more than 12% higher. The volatile new issue had gained 118% in September, but ended Friday down 53% from its Sept. 19 high. Among peer cannabis stocks, Cronos Group (CRON) surged 4.8%. Canopy Growth (CGC) posted a 2.4% premarket gain.

Intel slumped 0.7% after Barclays downgraded the stock to underweight from equal weight. The note also lowered the chipmaker’s price target to 38, from 53, citing decreasing market tailwinds, and increased competition from AMD. The report raised AMD’s price target to 25, from 15, but maintained its underweight rating. AMD shares shook off opening losses and jumped 1.4% in early action.

Industrial gases distributor Praxair (PX) pulled 3% higher after Chinese regulators approved the U.S. company’s merger with Germany’s Linde. The deal was announced in May 2017. The U.S. and South Korea still need to sign off on the merger.

Among the names getting a significant trade agreement boost, Allison Transmission (ALSN) jumped 1.6% higher at of the open. The maker of transmissions and drive trains for hybrid automobiles saw 6% of its 2017 revenue from Canada. Shares are extended, trading near highs and up 17% after a breakout from a cup-with-handle base in early August.

Global Stock Markets Mixed, Oil Prices Rise

Frankfurt led Europe’s markets higher, with the DAX up 0.9% in afternoon trade. The CAC-40 in Paris gained 0.4%, while London’s FTSE 100 slipped to a fractional loss.

In Japan, Tokyo’s Nikkei 225 advanced 0.5% — enough to overtake its January high and close at its best mark since November 1991.

China stock markets were quiet Monday. The Shanghai stock exchange is closed for the Golden Week holiday. Hong Kong’s market will re-open on Tuesday.

Oil prices edged higher, after last week’s 3.5% advance put prices within 3% of an early-July high. West Texas Intermediate added 0.3% to $73.45 a barrel. Brent crude gained 0.4% to $83.04.

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