Before The Bell
Wall Street started the new week on a mixed note on Monday with few decisive moves one way or the other. This uneven pattern of trading then resumed yesterday morning. Specifically, after a modest upward bump to start the second session of the week, stocks turned mixed by mid-session. Once more, the stock market was consumed by a flood of corporate earnings reports being issued as well as by the latest doings in the nation's Capitol, where Treasury Secretary Janet Yellen was sworn in by Vice President Harris. The market would end the day in uneven fashion, but boosted by a strong earnings beat by Microsoft (MSFT), in after-hours activity, the stock futures would rise modestly last evening. However, as the morning moves along some early profit taking is seen at the open.
In other news, new timetables for the distribution of COVID-19 vaccines were announced by the White House, with a somewhat more ambitious target of 1.5 million doses per day for the first 100 days of the Biden Administration now the goal. Also, the anticipated negotiations on a new stimulus package were taking place, where a bipartisan effort was the aim. As to earnings, they generally were coming in better than forecast, especially at Microsoft, and that was helping to sustain the stock market's strength so far this year.
Still, the equity market was struggling to go higher for much of the session yesterday, with stocks in a tight band, after a batch of earnings updates were issued, including from Johnson & Johnson (JNJ), which released a strong profit forecast, and from 3M Company (MMM), which had a nice quarterly beat. Both stocks advanced in early dealings. In general, this has been a good earnings season, in particular throughout the technology space. Also on the minds of investors was the conclusion of the two-day FOMC meeting later today. No changes are seen in rates or monetary direction.
On the political side, new Senate Majority Leader Chuck Schumer indicates that the Democrats will move forward on President Biden's coronavirus relief plan without Republican support if needed. Also in the news is the attempt to get vaccines into the arms of millions of Americans as variants of the coronavirus disease continue to circulate. Meantime, in addition to the two Dow stocks noted above, JNJ and MMM, erstwhile index component General Electric (GE) saw its stock rise after the conglomerate gave an upbeat outlook.
The market finally firmed up during the afternoon for a time, as heretofore struggling Dow issue International Business Machines (IBM) jumped upward in late dealings. That stock was under pressure last week on a quarterly revenue shortfall. Meanwhile, in economic news, consumer confidence edged upward in January. The latest survey showed a willingness to buy houses and cars, but there was trepidation about being too aggressive in the wake of the COVID-19 pandemic. In all, the survey saw a rise from 87.1 in December to 89.3 this month.
Finally, the market's late rally could not be sustained, and stocks would sell off a little at the close, leaving the three major large-cap indexes nominally in the red for the day. Looking to the day ahead, the U.S. equity futures are pointing to modest profit taking.
– Harvey S. Katz, CFA
At the time of this article's writing, the author had a position in GE.
