The stock indices are trading not far off breakeven levels as traders await inflation news and earnings data later this week. A few key developments have occurred in the business world, including news breaking after the closing bell yesterday that Hewlett Packard Enterprises (HPE) had reached a deal to purchase Juniper Networks (JNPR) for $40 a share in cash. Still, the broader markets remain largely unchanged, suggesting an uneven start to the trading day. Later today, trading could be impacted by the 10 a.m. release of the wholesale inventories report, which is notable given how few other reports are on the docket.
The stock market traded unevenly yesterday, falling early in the session. However, the indices recovered a portion of their losses throughout the day and finished not too far from breakeven levels. Overall, the S&P 500 fell seven points (down 0.15%), and the Dow Jones Industrial Average finished off 158 points (down 0.42%). However, the NASDAQ managed to finish in the green, gaining 14 points (up 0.09%) during the session. Market breadth was quite negative, as decliners outpaced advancers by a 2.3-to-1.0 ratio. Consumer staples stocks were among the best performers, while energy issues were among the weakest. A few sectors, such as consumer staples, healthcare, and utilities, have been gaining ground relative to the broader market in recent weeks. These segments tend to outperform during periods of market volatility.
In commodity news, oil prices rebounded some yesterday, as the market continued to react to Saudi Arabia's price cuts on Monday. The energy source fell significantly on this news Monday, but gained back a bit on Tuesday after becoming oversold. Elsewhere, U.S. Treasury bond yields were mixed, with short-term rates rising and long-term ones falling. The yield curve remains inverted, with short-term rates above those with longer durations. The Chicago Board Options Exchange Volatility Index, or VIX, more commonly known as the fear index, fell yesterday as traders demanded less options protection despite a minor fall in equity prices.
Later this week, several key economic reports will be released. These include the U.S. Bureau of Labor Statistics December core- and non-core Consumer Price Indexes on Thursday. On Friday, the December core- and non-core Producer Price Indices will be revealed. These should give further insight into the inflation picture, and traders will utilize this data to update projections on the Fed's interest rate policy. Elsewhere, earnings season will begin later this week, with several large companies reporting quarterly results. The most notable are Dow-30 components JP Morgan Chase (JPM) and United Health (UNH), which will both report on Friday. - John E. Seibert III
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
CLICK HERE for more information on our services or call 1-800-VALUELINE (1-800-825-8354). Our account managers are available Monday through Friday, 8:00 AM to 6:00 PM Eastern Time.
