After the Close
Stocks opened lower, weakened further in the early afternoon, before recovering some ground in the final hour of the session. At the close of trading, the Dow Jones Industrial Average was down 59 points; the broader S&P 500 Index was off seven points; and the NASDAQ was lower by 39 points. Market breadth was negative, as losers were slightly ahead of winners on the NYSE. Of note, the weakness was much more pronounced on the NASDAQ, which contains numerous volatile names. The market sectors were divided. Specifically, the financial, industrial, and healthcare issues moved lower, while the utilities and consumer non-cyclical names managed to move up.
Traders received just one notable news item today. Notably, the Empire Manufacturing Survey, which measures business conditions in the New York region, provided a reading of 6.5 for the month of January, which was a bit softer than had been anticipated. Tomorrow will be a busier day for news, as we will get a look at the Consumer Price Index for December, and the latest monthly industrial production figures. In addition, in the afternoon, the Federal Reserve will release its Beige Book summation for the month of January, followed some remarks from Fed Chair Janet Yellen.
Meantime, fourth-quarter earnings season is now under way, and quite a few high profile corporations delivered their results over the past 24 hours. In the Dow Jones Industrial Average, shares of UnitedHealth Group (UNH - Free UnitedHealth Stock Report) moved lower, after that company produced generally positive results. Meanwhile, shares of Morgan Stanley (MS) closed off somewhat, despite posting decent results.
Technically, stocks have encountered some resistance over the past few weeks. Perhaps, market sentiment will become more decisive, as additional corporations deliver their results. – Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Mid-Day Update - 11:45 AM EST
U.S. stocks opened lower to start this holiday-shortened week. Investors were digesting developments at home and abroad, including this week’s Presidential inauguration and the United Kingdom’s intended exit from the European Union. Advancing and declining shares were roughly equal for most of the morning’s trade, though each of the three major indexes have occupied negative territory since the opening bell.
On Friday, Donald J. Trump is set to be inaugurated as the country’s 45th President, the culmination of a transition process that has seen many equities and indexes rise to historically high trading levels. Recently though, uncertainty about the nation’s economic policies following the event has weighed on stocks. While Mr. Trump’s holds strong convictions on many issues – national security, border control, reinvigorating the nation’s infrastructure – investors are craving more specifics regarding the timing of these policy implementations. Further, recent indications made by the President-elect suggest that established trade agreements and alliances are ostensibly up for reconsideration, a destabilizing prospect that has hurt the technology sector, among others. His recent repudiation of the House of Representatives’ corporate tax reform plan, which has been a central tenet of his plans to stimulate growth of the U.S. economy, has tempered the post-election enthusiasm considerably.
Then, about an hour into trading, the bulls seemingly shook off the cobwebs and stoked a mid-morning rally that nearly erased the first hour’s deficit. Many of the typically pro-Trump market sectors that were resilient early on, such as the basic materials and utilities groupings, led the advance. But, none of the indexes were able to break into positive territory. Meanwhile, healthcare stocks continue to exhibit the most pronounced decline. Recent comments made by Mr. Trump and the imminent, if undefined, reconfiguration of the American healthcare system have both combined to hold the averages lower in the industry grouping. The bearish tone exhibited early on remained the dominant force for most of the morning’s trade, evidenced by the wide loss in the small-cap equity market.
Elsewhere, prospects in the oil market continue to brighten. Saudi Arabia appears to be committed to cutting output in accordance with OPEC. The cartel is hoping that adherence by its larger member nations will ensure restraint amongst other producers over the deal’s six-month span. Consistent price gains would help to appease nations that may find temptation in China, where an expected 7% yearly decline in domestic oil ought to drive demand increasingly higher in 2017.
So, with a dearth of economic updates on the docket today, we expect the bear may hold a grasp on trading. The bulls will likely mount several attempts at lifting the averages out of the red, but Dow 20,000 is probably out of reach for the day. Rather, the market is likely waiting for some transparency on the incoming administration’s policies before allowing that psychologically significant milestone to be met. Stay tuned. – Robert Harrington
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before the Bell
After a difficult market session on Thursday, with the Dow Jones Industrial Average off by as many as 180 points early on, as concerns mounted about President-elect Trump's policies and the timing of such endeavors, the market started to come back late in the day. And that comeback took off about two-thirds of that loss. Then, underpinned by some decent, if not overwhelming economic issuances on Friday morning, including data on retail sales, the market continued that late-Thursday comeback for a time.
Indeed, after the Dow jumped out to a morning-best gain of some 60 points, bringing that composite back above 19,950, it looked as though another attempt to push up to 20,000 would take place. But those hopes were soon dashed, as renewed selling took hold. But the ensuing downturn was not very steep, with the Dow never falling much more than 40 points, while the NASDAQ, abetted by strength in technology, rolled to yet one more record high, with that index now approaching 5,600. The S&P 500 Index also gained, but more modestly.
Overall, the market moved back and forth, but save for the Dow, which again was hurt by several health care stocks, the aggregate tone was positive, with more issues moving up than down, and with the small-cap Russell 2000 gaining broadly. Thus, it would seem that the market, excluding the 30-stock blue chip index, is continuing to make irregular progress. Also influencing market results was the start of fourth-quarter earnings season, with the financials taking center stage and doing well for the most part on solid income levels.
Regarding the financial, they led the market selectively higher on Friday, with Wall Street generally applauding results from JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report) and Bank of America (BAC) in particular. Meanwhile, small company stocks led the way higher, with the Russell 2000 Index gaining almost a percentage point. On the other hand, real estate stocks and energy companies closed lower on the day. Moreover, shares of certain department store chains also faltered as the December retail sales report showed particular weakness in that sector.
As to oil, prices fell by more than 1% on the day, dragging down shares of energy companies in the process. In all, it was a decent finish to an uneven week on Wall Street. On balance, the market has settled in at modestly higher levels through the first two weeks of the year, with the Dow up less than a percentage points; the S&P 500 ahead by almost two percent; and the NASDAQ in the plus column by more than 3.5%. The gain in the Russell 2000 is just over 1%.
Looking out at the holiday-shortened week ahead, we see that shares in Asia were mixed overnight as investors await a speech by British Prime Minister Theresa May on that country's pending exit from the European Union. Concerns about her pending Brexit remarks also weighing on stocks in Europe this morning, as is Friday's coming inauguration of Donald J. Trump as our next President. Such issues also apparently are on the minds of U.S. traders at this hour, as the futures are falling rather sharply here.
Finally, in other news, data issuances are limited today; oil is a bit higher; gold is up to an eight-week high; and interest rates are marginally lower. So, following a long weekend, stocks are set to open weakly, as the bulls hope this will be the week to crack Dow 20,000. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
