Stock Market Today: Let’s Make a Deal

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Investors soaked up even more gains on Friday, adding to the rally from Thursday. Investors are hopped up on optimism in the stock market today, as the U.S. and China look to reach a partial trade agreement.

According to Bloomberg, the deal has been reached, although there was also meeting between President Donald Trump and China’s Vice Premiere Liu He.

The deal is agreed upon in principal, but must be signed after being written up in a few weeks. The president says there will be two to three phases of a trade war pact, and that phase one is now agreed on. It’s a cautiously optimistic improvement, although perhaps not as promising as investors had hoped.

If the two parties can start to work together and clear up these trade-war headaches, the stock market could have considerable upside. Not only because some of the risk premium would be sapped from stocks, but because there’d be more certainty in the business world. Last but not least, it may give a boost to the global economy, which has been collateral damage in the situation.

We’ll likely need more than a partial trade deal to benefit from all of those potential catalysts, but hopefully phase one is one step closer to the goal.

Heard on the Street

Johnson & Johnson (NYSE:JNJ) is “historically cheap” according to Bernstein analysts. They argue that while $50 billion in settlements could be a worst-case event, the more likely range is $10 billion to $12 billion. Either way, the market has priced in the outcome at this valuation. They upgraded the stock to “outperform” and bumped their price target to $155 from $148.

Apple (NASDAQ:AAPL) continues to gain bullish analysts, with Wedbush being the latest to up its price target. The analysts moved their target to $265 from $245, on optimism for streaming video. They argue that Apple could have 100 million streaming subscribers in three to four years.

Apple has received at least four price targets in excess of $260 in the last three days.

The Trade Desk (NASDAQ:TTD) ripped 6.9% after analysts at RBC Capital Markets turned positive on the name. Analyst Mark Mahaney was cautious on the name in the summer as shares rallied higher and higher. After a more than 30% haircut though, it’s time to be more optimistic, he says.

He’s using an “outperform” rating and $250 price target. RBC also initiated Twilio (NASDAQ:TWLO) with an “outperform” rating and $135 price target.

Earnings, Earnings, Earnings

We’ve got a couple reports for the third quarter, a bulk of earnings season will start next week. Remember, Monday is Columbus Day, which is a bank and bond-market holiday, but not a stock market holiday.

As such, JPMorgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Wells Fargo (NYSE:WFC) will kick off the festivities on Tuesday before the open.

By Wednesday evening, we’ll have also heard from Citigroup (NYSE:C), Johnson & Johnson, Netflix (NASDAQ:NFLX), Bank of America (NYSE:BAC) and CSX (NASDAQ:CSX), among others.

Movers in the Stock Market Today

SAP (NYSE:SAP) jumped almost 10% on the day and held those gains throughout the session. The big boost comes after a few surprises. First, CEO Bill McDermott is stepping down from his role, effective immediately. Filling his role will be a co-CEO effort, with Jennifer Morgan and Christian Klein taking over the reins.

Given how well McDermott has done over the last nine years, it’s surprising to see such a robust rally in SAP. It helps that the company pre-released better-than-expected earnings and revenue results. But still, the move comes as a bit of a surprise.

SAP isn’t the only big mover on the day. Fastenal (NASDAQ:FAST) stock erupted 17.2% to new all-time highs on the day. After hitting a high of $36.58, the stock blew right through its prior high of $35.68. The rally comes after Fastenal delivered slightly better-than-expected quarterly results, although some investors don’t believe it was good enough to justify such a hearty rally.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long TTD, TWLO, AAPL, C and BAC.