After the Close
Stocks pared gains today after a couple of business advisory groups were disbanded by the President. At the close, the Dow Jones Industrial Average gained 26 points, after having been up as much as 86 points. Similar stories played out on the NASDAQ and the S&P 500, which ended the day up 12 points and four points, respectively. The small-cap Russell 2000 edged fractionally lower. Market breadth remained positive, though, with advancing issues topping decliners handily on the New York Stock Exchange.
The day started out in normal fashion, with a focus on earnings and the economy, as investors took in profit reports from retailers and awaited the Fed minutes at 2 p.m. Eastern time. In that respect, some retailers gave a surprisingly good account of themselves, with discounter Target (TGT) faring particularly well.
Target shares rose nicely for the session after the company beat analysts’ estimates for quarterly revenues, earnings, and same-store sales comparisons. In particular, large gains in online sales offered some promise that Target may be able to effectively compete with Amazon.com (AMZN), whose groundbreaking business model has been hurting retailers of all stripes.
Stocks were sailing along until early afternoon, when the business advisory councils were disbanded. It is not clear if those developments will have a lasting effect on sentiment. But it would be better to have a sense of unity between business leaders and the Administration at a time when pro-growth legislation is likely to be soon proposed.
Meanwhile, the release of the minutes from the last Fed policy meeting drew a tame response from Wall Street. A stubbornly weak rate of inflation is one of the Federal Reserve’s main concerns these days. Some central bankers seem to think there is enough economic strength developing to push inflation toward the Fed’s 2.0% goal, but other are of the view that the Fed should hold off on further interest rate hikes until inflation actually does perk up.
The bottom line is that interest rates are likely to remain lower than envisioned at the beginning of the year.
Except for energy, all of the market’s ten major sectors advanced. Energy stocks were hurt by a decline in oil prices, to under $47 a barrel.
More retailers are due to report earnings in the coming days, including Dow-30 component Wal-Mart (WMT- Free Wal-Mart Stock Report) before the market opens tomorrow. – Robert Mitkowski
At the time of this report, the analyst did not own any of the companies mentioned.
Mid-Day Update - 12:15 PM EDT
Equities are making moderate progress today. At just past noon in New York, the Dow Jones Industrial Average is up 75 points; the broader S&P 500 Index is ahead eight points; and the NASDAQ is higher by 31 points. Market breadth is favorable, with advancing stocks outpacing decliners by a healthy margin on the NYSE. Most of the major stock groups are well in positive territory, with gains in the technology and basic materials issues. In contrast, the energy names are lagging.
Elsewhere, traders received a couple of economic news items this morning. Specifically, housing starts dipped to an annualized rate of 1.155 million units for the month of July, falling short of analyst expectations. Building permits, which tend to serve as a forward-looking indicator, also declined during the month. For traders following the energy markets, the EIA announced that crude oil inventories declined sharply during the latest reported week. However, price of crude oil, now at just above $47-a-barrel, is moving slightly lower today. Of note, later this afternoon, the FOMC will deliver the minutes from its most-recent meeting.
Finally, a few more retailers issued reports over the past 24 hours. Specifically, shares of Urban Outfitters(URBN) are surging in price today after that company posted a better-than-anticipated report. In addition, shares of Target (TGT) are moving higher after the discount retailer delivered a favorable release and provided an encouraging outlook. After the market closes today, we will hear from technology giant and Dow component Cisco Systems (CSCO – Free Cisco Stock Report).
Technically, stocks seem to be stabilizing after faltering last week. However, it remains to be seen if the bulls can push the averages higher from here, without encountering some resistance. – 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
Following a strong equity market rally on Monday, as simmering tensions eased a little with North Korea, and fears of an imminent armed conflict with that nation lessened to a degree, Wall Street calmed down a bit yesterday morning, too. Indeed, after a small early extension to the rally in the first few minutes of yesterday's session, stocks faltered somewhat within the first hour of trading, and an early 35-point gain in the Dow Jones Industrial Average quickly faded, with that blue-chip composite falling into the red during the second hour of trading. The other averages went into the red, as well.
Meantime, a big individual story, one day after the shift away from North Korea, was at giant home improvement retailer The Home Depot (HD – Free Home Depot Stock Report), which issued quarterly results yesterday. And while the top and bottom-line results were better than expected, the gains, and the raised full-year forecast did not satisfy the Street, as that stock tumbled, losing nearly 4% of its value early on. The loss in HD turned the Dow negative, costing that index some 40 points. However, after that initial turn down by the Dow, that index returned to the black shortly thereafter. Also in the retail category weak earnings hurt Coach (COH) stock in early dealings.
Still, the resilience of the bulls was evident yesterday, with that late-morning attempted comeback in the Dow. Meanwhile, in other market moving news, the Commerce Department reported that retail sales had posted an increase of 0.6% in July. That was above the 0.4% rise forecast. Also, June's result was pared back from a rise of 0.4% to one of 0.3%. Excluding motor vehicle sales, core retail spending was ahead of 0.5%. Here, too, the gain was above consensus. Contributing to the pickup were sales of furniture and home furnishings, and building materials. Sales over the Internet soared, meantime, advancing by 1.3%.
The market remained in somewhat of a mixed pattern as the noon hour arrived in New York, with the Dow near the breakeven line, and with the S&P 500 and the NASDAQ each off incrementally. The small-cap Russell 2000 and the S&P Mid-Cap 400 also were in the red, but in a more meaningful way. As has been the case recently, it was the retail group suffering once again, with steep losses in some high-profile names, such as Under Armour (UAA). Also, more stocks were lower than higher on the Big Board at that time, by a count of two-to-one while among the core groups, energy, basic materials, and consumer stocks were leading things lower.
The weak tone persisted through the middle of the afternoon, and while the Dow held near the breakeven line, and the large-cap S&P 500 and the NASDAQ were just down incrementally, the smaller indexes and the advance-decline ratio were notably off. It was, to that point, a somewhat sobering day, even as the economy continued to show relative strength and the news out of North Korea was somewhat reassuring, for now. The equity market then would firm up slightly as the session wound down, but the overall weaker tone would persist into the close.
When all the numbers were in, the Dow, with some last-minute selling, would end the session ahead by just five points; the S&P 500 would conclude matters just about where it began them; and the NASDAQ would end the day off seven points. Losing stocks easily led gains, though, and the small- and mid-cap categories showed noted weakness. As for the current session upcoming, stocks in Asia were mixed overnight; the European bourses are higher so far this morning; U.S. futures are trending higher, so far, as well. Elsewhere, oil is up; gold is lower; and bond yields are climbing ahead of this afternoon's release of the Federal Reserve's minutes from its last FOMC meeting. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
