After the Close
The U.S. stock market registered wide gains on Wednesday, continuing the bullish trend that characterized yesterday’s activity. Indeed, the bulls maintained a tight grip on trading and never looked back. The financial sector led all the market groupings today, with industrial and technology shares not far behind, as the day-long ascent had advancing issues outnumbering declining shares by a 1.8-to-1 margin on the New York Stock Exchange. The S&P 500 and NASDAQ indexes were strong today, as well, and each set record highs during the day. But, headlining a day of positive news was the Dow Jones Industrial Average’s long-awaited passing of the 20,000 milestone.
Following a several-week break from the rampant post-election rally that spurred industrial, basic materials, and other sectors to all-time high valuations, the upward trend seen since yesterday morning is largely due to executive orders signed by President Donald J. Trump. Investors had clamored for more transparency from the Administration in the weeks leading up to last Friday’s inauguration, but Mr. Trump was evidently waiting to take office to show his hand. Not only will the nation begin construction on a border wall, but updates regarding infrastructure and corporate taxation are set to be revealed in short order. The business-friendly initiatives promised on the campaign trail are beginning to foment into tangible policies, which have reinvigorated enthusiasm across a number of sectors.
On the earnings front, Dow-30 member Boeing (BA - Free Boeing Stock Report) rode optimism from its quarterly report to solid gains on the day. The aerospace titan anticipates higher plane deliveries in 2017 and record cash flow. Meanwhile, United Technologies (UTX - Free United Technologies Stock Report) opted to stay pat on guidance after it released earnings, which ostensibly caused many to sour on its outlook. The stock did pare some of its losses as the afternoon wore on. Industry compatriot Textron (TXT) was not so fortunate, shedding more-than 6% of its market value after slashing $0.25 and $350 million, respectively, from its share-net and sales forecast.
In all, it was another dominant showing for the bulls, with large- mid- and small-cap stocks each holding onto impressive full-day gains. The Dow finished the day up 155 points, while the S&P 500 and NASDAQ wrapped the day near their aforementioned record levels. Some opportunistic profit taking is likely to occur in the short term, but we think the buying spree will likely persist if the President announces key infrastructure and national security initiatives in the coming weeks. – Robert Harrington
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Mid-Day Update - 12:00 PM EST
Stocks hit full stride today, with the Dow Jones Industrial Average topping the much-anticipated 20,000 mark for the first time on the heels of a 130 point advance around the noon hour on the East Coast. The rally is broad and deep, with the NASDAQ rising 39 points and the S&P 500 up 13 points. Both of those indexes are also at all-time highs. At the same time, gainers are well ahead of decliners on both the New York Stock Exchange and the NASDAQ.
This morning’s advance was an exclamation point to the surge in stocks that has occurred since Election Day last November. Investors are banking on a spurt in economic growth following the implementation of the new Administration’s plans to push infrastructure projects while eliminating seemingly excessive regulations.
Today’s rally can be considered a classic. Most of the stock market’s ten major sectors are higher, and notably so for those that stand to strongly benefit from a broad-based pickup in business. Included in that list are stocks in the financial, technology, cyclical, and industrial segments of the market.
Even the energy sector is nicely ahead following a turnaround in oil prices. Oil prices dipped earlier in the day, probably since Wall Street is looking for a rise in domestic stockpiles when a government report is issued later today. But quotations were most recently a bit higher, presumably caught up in the bullishness of the trading session for stocks.
Among individual names, shares of Dow-30 component Boeing (BA - Free Boeing Stock Report) are flying high. The aerospace giant turned in an earnings report that surpassed analysts’ expectations. Projections for more planes to be delivered and record cash flow in 2017 are lifting sentiment toward the stock.
On the down side, shares of United Technologies (UTX - Free United Technologies Stock Report), another Dow member, are fairly poorly. Although profits were in line with expectations, fourth quarter revenues were a bit less than what the investment community was looking for. The company only maintained its year-ahead guidance, as well, rather than raising it, which is contributing to the underwhelming response.
Overall, the moral of the story these days is "Don’t fight the tape." Rich valuations for stocks aside, the bulls for now are clearly in charge. – Robert Mitkowski
Before the Bell
After a weak Monday, in which the stock market came back late, but still closed down for the day, equities broke to the upside in early dealings yesterday and never looked back. And unlike some recent days, the gains were largely across the board, with most of the big-cap and small-cap indexes fully participating. In review, the session started out well and seemed to gather strength as the morning went into the lunch hour in New York. The gains were stoked by some bargain hunting following a series of declines in recent days and by some optimism on the earnings front.
In fact, the strength even came about as several major names in the Dow Jones Industrial Average posted uneven results, with net earnings climbing, but revenues falling short. Several of these high-profile companies, in fact, saw their stocks falter a bit. Also, the National Association of Realtors posted uneven housing results, with sales of previously owned homes falling 2.8% in December, but rising to a 10-year high for the 12 months. The major problem was a paucity of inventory, which is restraining activity. But activity remains brisk, overall, and once this inventory shortfall is satisfied, sales should perk up.
Meanwhile, after this quick start, the market, strengthened further as the afternoon began, with the advance-decline ratio improving nicely as the day wore on, with more than twice as many stocks rising than falling by mid-session. As to the respective groups, eight of the 10 key sectors were ahead after the first half day of trading, with basic materials leading the way with more than a 2% rise, while the telecom group and the health care sector lagged. The strength in the basic materials area helped the steels, in particular, perform admirably.
The market then strengthened further as the session progressed, with the Dow posting a triple-digit gain in mid-afternoon. In all, a rise of better than 140 points at the time, brought that composite to within a little over 50 points of the 20,000 mark, making for another test of that esteemed level seem entirely feasible in the short run. As before, the increase was led by basic materials. Also, unlike the Dow, the S&P 500 Index made one more all-time high during the day, gaining strongly and coming to within 20 points of 2,300. Helping trading sentiment was a belief that the economy and earnings would continue to perform well.
As noted, a number of the Dow components outperformed expectations on their bottom lines, even as they missed on the top line. Interestingly, though, three of the stocks continued to falter, led lower by Verizon Corp. (VZ - Free Verizon Stock Report). However, one of the day's big winners was another Dow company. On point, DuPont (DD - Free DuPont Stock Report) pleased investors with its report, and that stock was up more than 4% during the mid-afternoon. Once again, the health care group lagged, as it has for some time now on pricing concerns. One major laggard here was Bristol-Myers Squibb Co. (BMY) on a brokerage house downgrade.
Stocks then continued to hold their own as the afternoon wound down, with broad gains across most groups, again led by the steels and other metals producers. True, the Dow did not go any higher, but there also was no selloff of note as the day concluded. In all, the market closed somewhat off its highs, but retained formidable increases nonetheless, including gains of 113 points on the Dow, 15 points on the S&P 500, and 48 points on the NASDAQ. The S&P Mid-Cap 400 and the small-cap Russell 2000 also did well. One down note, bond yields stiffened, with the 10-year note's return rising to 2.47%.
Looking out at a new day, we see that stocks were nicely higher in Asia overnight, led by a 1.4% gain in Japan's Nikkei, while they are also up smartly in Europe so far this morning, with Germany's DAX in the lead. And on our shores, bond yields are up, while metals prices and oil are lower, with the latter weaker on inventory concerns. In the meantime, our futures are up notably, suggesting that a new move on Dow 20,000 could well be in the offing today. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
