After The Bell
The stock market put in a choppy, but ultimately constructive session today. At the close of trading, the Dow Jones Industrial Average was ahead 116 points; the broader S&P 500 Index was up four points; and the NASDAQ was higher by 20 points. Market breadth was somewhat negative, with decliners just ahead of advancers on the NYSE. Most market sectors managed to forge ahead, with some leadership visible in the energy names. However, the telecom and utility issues did not participate in today’s advance.
There were no economic reports released this morning. Tomorrow will be a busier day. Existing home sales for the month of February are due out. In addition, the EIA will release the latest weekly crude oil inventory figures. But the main event will come in the afternoon, when the FOMC wraps up its two-day meeting and weighs in with an interest-rate decision. Wall Street expects the Federal Reserve will implement a small rate hike tomorrow, and that outcome would probably not be much of a surprise. Meanwhile, traders will also likely be listening closely to any commentary that will be provided.
In the corporate sector, a few companies delivered their financial reports over the past 24 hours. Specifically, shares of Oracle (ORCL) sank in price today, as investors were clearly unimpressed with the technology leader’s report. Further, shares of The Children’s Place (PLCE) retreated, in response to a disappointing outlook. Meanwhile, some social media companies, such as Facebook (FB) and Twitter (TWTR), saw their stocks move lower on concerns about privacy issues and possible regulatory action.
Technically, the stock market has been directionless lately. Despite some strength today, the S&P 500 Index is back below its 50-day moving average (located near the 2,750 mark). It remains to be seen what information, if any, might serve as the catalyst needed to spur on the bulls and push stocks higher from here.
– 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
Stocks opened lower yesterday morning to start a busy week for equities, after losses overseas earlier in the day, as Wall Street awaited the start and conclusion of the two-day FOMC meeting. This gathering, the first for Federal Reserve Chair Jerome Powell, which will commence this morning, is expected to conclude with the lead bank voting for its first interest rate increase thus far in 2018. This presumptive hike, which would be announced tomorrow afternoon, could well be the first of three to four such increases this year.
Also on tap this week are reports on jobless claims, existing home sales, the leading indicators, new home sales, and durable goods orders. However, the big news story will be the Fed meeting and accompanying monetary action and statement. In other news, Wall Street is still fretting over the tariff issue, with fears of a global trade war on the collective minds of traders. Finally, there are the personnel issues surrounding the Administration and some key government agencies. All of this news clearly weighed on stock market sentiment yesterday morning.
Thus, stocks opened the day and week notably to the downside, with the assorted concerns helping to quickly send the Dow Jones Industrial Average down by more than 200 points. Leading the way lower on the NASDAQ, which was the biggest loser among the large caps indexes, were shares of Facebook (FB) with a near 10-point slide initially. The pullback later topped 15 points. The issue with Facebook, which suffered its worst day in more than half a decade, were reports that the social media company's user information was misused.
The market's slide then accelerated in the afternoon, and as we entered the final two-and-a-half hours of trading, the Dow's loss had ballooned to almost 500 points, putting that composite into the loss column for the year. The damage was even worse on the NASDAQ. This downswing then continued into and through the afternoon, though there were no further downside breakthroughs. Overall, the Dow remained in the red by anywhere from more than 300 points to a little shy of 500 points, while the NASDAQ's loss swelled to almost 200 points at one time.
The downside action then persisted into the close with the Dow and the NASDAQ ending the session off by 336 and 138 points, respectively, having regained less than a third of their losses by the end of trading. The recovery in the small-cap Russell 2000 was about 50%. Breaking things down somewhat more, we see that all 10 of the major equity sectors were in the red, pulled down mostly by technology, energy, and basic materials. Also, losers topped winners by almost four-to-one on the Big Board. So, even with the late buying, it still was a rout of the bulls.
Looking out on a new day, we see that shares in Asia were trading in mixed fashion overnight. In Europe, in the meantime, the major bourses are moving a tad lower at this hour. Also, Treasury note yields, which ended the business day yesterday at 2.85%, are now passing hands at 2.87%, while oil is up in early trading in New York on tensions in the Middle East. Finally, as the Fed gets started on its FOMC meeting, the U.S. equity futures are now pointing to a modestly weaker start when live trading gets under way at 9:30 AM (EDT) this morning.
— Harvey S. Katz, CFA
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
