After the Close
Equities put in a mixed-to-weaker session today. At the close of trading, the Dow Jones Industrial Average was up 36 points, while the broader S&P 500 Index and the NASDAQ were off nominally. Market breadth revealed a somewhat negative quality to the day, with decliners ahead of advancers on the NYSE. The widely watched equity sectors also showed a divided tone. There was notable weakness in the basic materials and non-cyclical consumer names. Meanwhile, a degree of strength was found in the recently weak telecommunications stocks.
Today’s economic news was not too encouraging. On the employment front, initial jobless claims edged up to 259,000 for the week of January 21st, where analysts had been looking for a better reading. In the housing market, new home sales came in at an annualized rate of 536,000 units for December, falling short of expectations. Tomorrow we get a look at the advanced reading for fourth-quarter GDP, which is anticipated show a 2.29% increase in economic activity. Durable goods orders for December will also be released. In addition, the University of Michigan’s consumer sentiment survey for the month of January will be finalized.
Finally, the fourth-quarter corporate earnings season is in full swing. During the past 24 hours, a number of large names reported. In the Dow Jones Industrial Average, shares of Caterpillar (CAT – Free Caterpillar Stock Report) traded lower in response to a soft report. Elsewhere, shares of AT&T (T) closed up modestly, after the telecom giant put out decent results.
Technically, stocks have been making some progress lately, and that may well continue for the next couple of weeks, assuming the rest of the earnings season goes well. – 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 - 12:15 PM EST
The bulls’ control of trading wavered somewhat as Thursday morning progressed, with the market showing a rough split between advancers and decliners at noontime on the East Coast. Some profit taking and sector rotation are no doubt playing into the largely directionless performance, with cyclicals, financials, telecomm, and utilities offsetting downturns in other market sectors.
Newly released U.S. economic data probably contributed to some of the selling, with new home sales falling 10.4% to a 10-month low of 536,000 units in December. This broke three months of gains, though market-watchers remain confident in the housing market’s ongoing recovery. Also in December, jobless claims rose more than anticipated. A slew of earnings reports is also influencing trading, with key components in many industries, including tech, telecom, and automotive, reporting December-period results.
The day after it crossed the psychologically important 20,000 barrier, the Dow Jones Industrial Average held onto solid gains Thursday morning. Generally speaking, the 30 stocks that make up the Dow have responded well to the President’s recent executive actions, which have confirmed many of the business-friendly initiatives touted on the campaign trail. Among the directives, the facilitation of the Keystone XL and North Dakota Access Pipelines have had a particularly encouraging effect on the market.
While the blue chips continue to tick higher, the broad-based S&P 500 Index and technology-driven NASDAQ also set record highs early in the day’s session. But the optimism there faded, and both index fell into the red when early-hour positivity dissipated. This was likely a symptom of profit taking, with investors closing highly valued positions after a nice rally. Still, both showed signs of recovery around lunchtime, with each of them breaking even intermittently. The Russell 2000, which gauges the performance of small-cap stocks, is notably lower today.
Meanwhile, oil prices were meaningfully higher this morning, despite higher domestic inventory levels. A recently weakened U.S. dollar is helping to spur demand. Investor sentiment is likely also being propped up by growing confidence that OPEC and its constituents can effectively maintain a six-month drilling cap. That accord has budged somewhat, with key customers in Asia being spared any restrictions so as not to hurt producers’ market share. Time will tell whether or not this leeway encourages member nations to break from the agreement. At the noon hour in New York, U.S. crude was showing a 2% per-barrel price increase.
The tug-of-war will likely continue, with persistent economic optimism battling with profit taking and earnings-related corrections up to the closing bell. As always, 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
Buoyed by a series of executive orders from President Donald J. Trump, which Wall Street perceives as very business friendly, the stock market made a succession of all-time highs yesterday morning, led by a surge above 20,000 for the first time ever for the Dow Jones Industrial Average. Specifically, traders, who have been waiting for some specifics from the President on his economic plans, received some welcome news before the market opened, as he signed executive orders to build the Keystone XL pipeline and the uncompleted portion of the Dakota Access pipeline.
These moves, as noted, helped propel the Dow well past 20,000 in the early going. Also reaching record high ground was the S&P 500 Index, which approached 2,300 in the first few minutes of trading. And the NASDAQ, already the strongest of the three indexes so far this year, also secured a record high early in the session. Most groups followed suit, with eight of the 10 leading equity areas up in early dealings. Only the telecom and utility sectors were in retreat, as gaining stocks were ahead of losing issues to the tune of some two to one on the NYSE in late morning.
The equity market then moved still higher, as the first two-and-a-half hours of trading ended, with the Dow's gain surpassing 160 points at its morning high. In fact, even the drug issues, off early in the day again, firmed as the session wore on. To be sure, there were a few disappointments, such as United Technologies (UTX - Free United Technologies Stock Report), with that conglomerate and Dow component meeting earnings estimates, but falling short on the revenue line. However, another Dow stock, Boeing (BA - Free Boeing Stock Report), pleased the Street with its results, and that stock advanced strongly, hitting a record high in the process.
The stock market, as noted, sustained most of its morning gains into the noon hour, and as we reached that point, the Dow was still up some 135 points, with a clear advantage of winning stocks over losing issues continuing, as optimism remained securely in place. Equities then continued to rally into the mid-afternoon, as the Dow threatened to climb to 20,100, as we moved inside the final two hours of the trading day. Financials were in the lead at this point, with industrials, such as Dow-30 component Caterpillar (CAT - Free Caterpillar Stock Report) also doing well, setting a yearly high in the process. The tech sector likewise rallied strongly.
Stocks continued to hold strong gains into the close, so that as we concluded trading on this historic day, the Dow was ahead by 156 points; the S&P 500 Index was better by 18 points; and the NASDAQ was up by 55 points. Healthy gains also were recorded by the small- and mid-cap indexes, while gaining stocks held onto their formidable advantage over declining issues, with the earlier two-to-one ratio ending up just shy of that mark, while, in the end, just about all of the 10 leading groups finished higher, with the telecom and utility sectors closing at essentially breakeven levels.
Interestingly, the market normally continues its ascent after reaching such celebrated milestones, which often can be measured in the thousand-point marks. So, the logical thing would be to expect further gains by the Dow and the other averages in the weeks and months to come. That would be especially so if earnings and Washington continue to deliver.
As to the markets in the short run, early tidings from abroad show that the markets in Asia were strongly higher overnight, while they are up nicely in Europe in early dealings this morning. And stateside, we see that oil is pennies a barrel higher, but Treasury yields also are climbing, and that is somewhat ominous, with the return on the 10-year Treasury note now up to 2.53%. Earlier this morning yields had been approaching 2.55%. Still, U.S. equity futures are up modestly, implying a strong opening when trading resumes in less than an hour from now. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
