The major domestic equity indexes extended their positive trend on Monday, with the Dow Jones Industrial Average reaching its longest daily winning streak in 13 months. The Dow ended up for a sixth straight session, its longest winning streak since May 2018.
One key reason was a possible ending or at least a postponement of plans to impose tariffs on Mexican goods. In addition, a couple of multibillion-dollar mergers were announced.
Friday saw Mexico agreeing to step up efforts to stem the flow of Central American migrants after Washington threatened to impose a 5% import tariff on all Mexican goods starting on Monday.
The Mexican trade news had the S&P 500 about 2% from its early May record high. However, the major indexes ended the session well off their high for the day meaning that that there could be more hope than on reality on the trading floor.
Meanwhile, the U.S.-China trade war is still with us, and again Wall Street may have become too optimistic that the Federal Reserve will come to the rescue with an interest rate cut. Stocks have been rallying in part on optimism that the Fed would turn more accommodative to blunt the impact of escalating trade tensions.
United Technologies agreed to combine its aerospace business with defense contractor Raytheon to create a new company worth about $121 billion. Unfortunately, United Technologies fell 3.1% after Trump said he was a “little concerned” about the merger as it could reduce competition in the sector. Raytheon rose 0.7%.
Salesforce.com Inc said it would buy data firm Tableau Software for $15.3 billion. Salesforce.com was down 5.3%, while those of Tableau surged 33.7%.
Domestic automakers, which have long built vehicles in Mexico, traded higher, with General Motors gaining 1.5%. Corona beer maker Constellation Brands, which has significant Mexico exposure, rose 1.9%.
Approximately 6.45 billion shares changed hands on the major domestic equity exchanges, as compared to the 6.99 billion share average over the past 20 trading days.
Decline in Job Openings
The number job openings fell slightly in April, but a surge in hiring to a record high suggested strong demand for labor before a recent escalation in trade tensions that was partly blamed for a sharp slowdown in employment growth last month.
The Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS report released Monday morning indicated a small rise in layoffs, though they remained at historically low levels.
Job openings, a measure of labor demand, slipped to a seasonally adjusted 7.4 million from 7.5 million in March, the government said. The job openings rate was unchanged at 4.7%. Hiring increased by 240,000 jobs in April to 5.9 million, the highest level since the government started tracking the series in 2000. The hiring rate increased to 3.9% from 3.8% in March.
The economy created only 75,000 jobs in May after adding 224,000 positions in April, the government reported last Friday. The unemployment rate was unchanged near a 50-year low of 3.6%.
Job openings have been trending sideways since hitting an all-time high of 7.6 million in November. Some economists viewed this as a sign that the labor market was slowing, regardless of the impact of the trade fights on hiring decisions by companies.
Vacancies in the federal government increased by 22,000 jobs in April. But job openings decreased by 172,000 in the professional and business services sector. The increase in hiring was concentrated in the private sector, with employers in the real estate and rental and leasing industries filling 34,000 vacancies in April.
The number of workers voluntarily quitting their jobs was little changed at 3.5 million in April, keeping the quits rate at 2.3% for 11 consecutive months. The quits rate is viewed as a measure of job market confidence.
Layoffs edged up in April, lifting the layoffs rate to 1.2% from 1.1% in the prior month, increasing in the real estate and rental and leasing industry.