After The Close
The stock market put in a choppy, but somewhat constructive, session today. At the end of the day, the Dow Jones Industrial Average was ahead 65 points; the S&P 500 Index was up 10 points; and the NASDAQ was higher by 26 points. Market breadth was positive, with winners just ahead of losers on the NYSE. The energy and financial issues led the market higher, offsetting weakness in the healthcare names and utility stocks.
There were no major economic reports released today. Tomorrow we will get a look at the January factory orders. It should also be mentioned that the Federal Reserve will begin its two-day FOMC meeting, which concludes Wednesday afternoon with an interest-rate decision and some prepared remarks. For now, most traders on Wall Street expect the current rate policy to remain unchanged.
In the corporate arena, there were few profit reports issued today. However, there was some M&A announcements worth touching on. Shares of Worldpay (WP) moved sharply higher on news that the electronic payment processing company has agreed to be acquired by Fidelity National Information Services (FIS) in a deal valued at roughly $35 billion. The transaction may have investors speculating that additional consolidation will be taking place in the rapidly expanding electronic payment industry.
Technically, the market continues to press ahead. For now, traders seem optimistic that the economy will continue to expand, and that a trade agreement between the United States and China will eventually be reached.
- Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell
The U.S. stock market got back to its winning ways last week. For the five-day stretch of trading, the Dow Jones Industrial Average, the technology heavy NASDAQ, and the broader S&P 500 Index produced respective gains of 1.6%, 3.8%, and 2.9%. It was the first winning week for the Dow 30 in nearly a month, and the index of 30 bellwether companies was able to overcome a poor showing from Boeing (BA – Free Boeing Stock Report), one of its biggest components. Shares of the aerospace giant shaved about 300 points off the Dow last week after reports surfaced that one of its 737 MAX jets crashed in Ethiopia, killing more than 150 passengers (a second major crash for the Boeing jet) and forcing the grounding of the jet. The reports also brought worries that future orders would be canceled. The stock did recover some on Friday on news that the company is finalizing a software update for the 737 MAX jet. The updates are intended to address how the aircraft's flight control system, MCAS (Maneuvering Characteristics Augmentation System), responds to erroneous sensor inputs. But additional reports surfaced over the weekend (more below).
The final day of the trading week, helped by some recovery in Boeing stock, was a good one for the bulls. The three aforementioned averages climbed 139, 58, and 14 points, respectively. The primary catalyst was mostly positive sentiment regarding a trade deal between the United States and China. Investors were encouraged by reports that the world’s two largest economies may be close to agreeing to a deal on trade, which would remove the tariffs between the two nations that many pundits think will hurt the global economy if no resolution takes place. The third Friday of the month, helped by the trade sentiment and with the deadline for expiring of option contracts, saw a big uptick in trading volume. For the session, advancing issues led decliners by a comfortable margin on both the New York Stock Exchange and the NASDAQ, to the tune of more than three to two on the Big Board. There was particular strength seen in the large-cap sector. Of note shares of industry behemoths Microsoft (MSFT – Free Microsoft Stock Report) and Visa (V – Free Visa Stock Report) hit record highs on Friday.
Looking to the week at hand, the attention of Wall Street is likely to be on trade talks and the Federal Reserve. Indeed, the Federal Open Market Committee’s two-day monetary policy meeting will commence tomorrow morning, and the Federal Reserve’s policy statement will be released on Wednesday afternoon at 2:00 P.M. (EDT). The central bank is expected to hold interest rates steady, so the investment community will mostly be looking for clues about future monetary policy decisions. The Fed’s dovish commentary at the end of 2018 has played a big role in the market’s recovery thus far in 2019 after a very difficult conclusion for equities last year. The Federal Reserve statement may also include new information on the bank's $3.8 trillion balance sheet, the unwinding of which has acted as a de facto interest rate increase for the world's biggest economy. In addition to the trade and Fed news, we will get data from the business beat, which have proven to be uneven thus far in 2019. Many of the reports on the economy have been delayed by the government shutdown earlier this year. This week the releases will center on the housing market, with data due on housing starts and existing home sales. The Home Builder’s Sentiment Index will also be released this morning at 10:00 A.M. (EDT).
With less than an hour to go before the commencement of the new trading week stateside, the equity futures are indicating a mixed, but predominately positive start for the U.S. stock market. The Dow Jones Industrial Average is likely to open in the red, with Boeing shares once again the major reason. Boeing stock is down in pre-market action after a pair of newspaper reports surfaced over the weekend that raised more questions about the certification process for Boeing’s 737 MAX jets before two recent deadly crashes. Specifically, the reports said that the U.S. Transportation Department was probing the Federal Aviation Administration's approval of the 737 MAX and in particular its anti-stall MCAS system. Meantime, overseas the news has been mostly positive. The main indexes in Asia finished nicely higher overnight, while nearly all of the major European bourses are modestly in the black as trading moves into the second half of the session on the Continent. Stay tuned.
– William G. Ferguson
