After The Bell
The equity markets put in a largely constructive session today. At the end of trading, the Dow Jones Industrial Average was down four points; the broader S&P 500 Index was ahead six points; and the NASDAQ was higher by 52 points. Market breadth was favorable with advancers nicely ahead of decliners on the NYSE. Nonetheless, the major stock market sectors were somewhat divided, with gains in the technology and utility stocks, offset by softness in the healthcare and basic materials names.
Meanwhile, it was a light day for economic news. However, tomorrow the pace should pick up, as existing home sales for the month of December will be released. On Thursday, the new home sales numbers will be reported, along with numerous other items.
Finally, the fourth-quarter earnings season is now in full swing. Today, several members of the Dow Jones Industrial Average weighed in with their reports. The results put some pressure on the blue chip index. Specifically, shares of Johnson & Johnson (JNJ – Free J&J Stock Report), Procter & Gamble (PG –Free P&G Stock Report), and Verizon (VZ – Free Verizon Stock Report) lost ground. In contrast, shares of Travelers (TRV – Free Travelers Stock Report) advanced. Elsewhere, the NASDAQ and the broader technology sector benefited from a strong showing by Netflix (NFLX).
Technically, the stock market continues to press ahead, as we move through the month of January. While valuations may look elevated, for now, the bulls remain in control.
— 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
U.S. equities, after some hesitation at the start of yesterday's session, quickly turned higher, as investors looked beyond the latest government shutdown, which began on Saturday, but, as noted below, would end by yesterday afternoon. Indeed, even in the morning, traders believed that the shutdown would be brief and not consequential. So, stocks rallied modestly. Also, helping the market was continuing confidence in the durability of the economic upturn and optimism about corporate earnings, which got an early lift yesterday from better-than-expected results from Halliburton (HAL).
These early gains were then sustained as we moved into the late stages of the morning, with the confident upturn in the market led by the NASDAQ, which, along with the S&P 500 Index climbed to more all-time highs, in a buying burst that was finally joined by the Dow Jones Industrial Average. In all, as the afternoon commenced, the Dow had climbed to another all-time high, as well, rising by more than 80 points, as the leader of the Senate Democrats said there were sufficient votes in that chamber to end the shutdown.
When, his confidence was vindicated, and a deal that will keep the government fully open until February 8th was struck, stocks moved further ahead. As the afternoon progressed, in fact, the gains increased. In truth, even when the shutdown continued early in the day, there was no rush to sell, suggesting that even if it had continued on a short-term basis, the rally would not have floundered much. The fact that it ended so quickly and without damage only helped the bullish cause.
So now, or at least for the next two weeks, or so, the focus will shift to earnings, as the majority of U.S. companies will be posting their latest quarterly results. If the past week, or so, is indicative, the high expectations will be met and then some. Strong earnings, to be sure, have been the key propellant for the current move higher by equities. As to yesterday's performance, stocks continued to roll as the afternoon wound down, so that by the close, stocks were just about at the day's highs.
In all, the Dow Jones Industrial Average with a late push closed higher by 143 points, as one of the best January's ever continued to get better. Also, the S&P 500 climbed 23 points; the NASDAQ surged 72 points, or just about one percent; and the small-cap Russell 2000 rose almost eight points. All told, it was a strong way to start a critical week for the market.
Looking ahead to a new day, we see that shares were trading sharply higher in Asia overnight, while in Europe, the key bourses are tracking mostly upwards. Moreover, oil prices are moving a bit higher in early dealings, while yields on U.S. Treasuries, which rose to 2.66% yesterday, are passing hands at 2.63% thus far this morning. Finally, U.S. Treasuries are suggesting a slightly softer opening when trading resumes a bit later 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.
