Wall Street was in a good mood to celebrate the start of what many hope to be able to call the Roaring '20s, as stock market indexes continued to move higher Thursday morning and added to their gains from 2019. But some of the market's momentum faded as the morning went on. As of 11 a.m. EST today, the Dow Jones Industrial Average (^DJI -1.08%) was up 127 points to 28,665. The S&P 500 (^GSPC -1.64%) gained 7 points to 3,238, while the Nasdaq Composite (^IXIC -1.82%) rose 48 points to 9,020.
Investors are busy trying to decide how to position their portfolios for 2020, and that had a lot of stock analysts offering their opinions. MercadoLibre (MELI -2.49%) got some favorable comments that spoke highly of the Latin American e-commerce specialist's payment platform, but Signet Jewelers (SIG 0.04%) had to deal with skepticism about the jewelry retailer's ability to weather tough conditions in its industry.
Feliz ano novo for MercadoLibre
Shares of MercadoLibre climbed 5% on Thursday morning, adding even more gains to a stock that had already climbed more than 90% in the past year. Analysts at Citi mentioned the Latin American e-commerce giant obliquely, but it looks as if more investors paid closer attention to MercadoLibre than to its partner.
Citi noted that the agreement MercadoLibre has with U.S. payment specialist PayPal Holdings (PYPL -3.68%) could be particularly auspicious for PayPal, which has worked hard to bolster its global presence. PayPal has also acquired majority control of a payment network in China, and it has collaborated with banks across the globe in order to offer nearly ubiquitous access to its digital wallet service.
Yet investors like MercadoLibre's prospects in part because the company is smaller than PayPal but has similar (or even superior) growth potential. The Mercado Pago payment service has taken off for MercadoLibre, and just as U.S. online marketplaces discovered, the value of the payment processing network might well end up exceeding what MercadoLibre gets from its core e-commerce retail business.
MercadoLibre has already seen strong gains, but the potential for the Latin American economy to keep developing and growing is huge. Even after strong performance in 2019, MercadoLibre's stock could have further to run in 2020.
Meanwhile, shares of Signet Jewelers were down 14% following negative comments from financial professionals. Stock analysts at Wells Fargo downgraded shares of Signet from equal weight to underweight, and investors didn't like the things they had to say about the jewelry retailer.
Signet faces a confluence of factors weighing on the stock, according to Wells. The core jewelry business isn't doing terribly well, since consumers are starting to find it more difficult to get financing for big-ticket purchases as financial institutions anticipate future deterioration in credit quality. At the same time, tariffs have hurt Signet, and although the tone between the U.S. and China seems to be improving, investors know how volatile that relationship has been lately.
The drop throws some cold water on what had been a rally for Signet, with many having hoped that CEO Gina Drosos had successfully executed the first part of a three-year turnaround plan to get the jeweler back in shape. Strong quarterly results in December supported that view, pushing shares higher.
However, fears about a possible recession in 2020 have made some question whether store closures and cost-cutting measures will be enough for the company to regain its past prominence. A lot will depend on its e-commerce initiatives, and so investors will look forward to getting Signet's read soon on how the holiday season went.