After The Close
The stock market opened lower this morning and was unable to meaningfully recover much ground as the day unfolded. Traders seemed to be exercising some caution, after some weak economic reports were posted earlier today. Further, Wall Street seemed concerned that relations with China could sour, especially if tensions with Hong Kong persist and the U.S. starts to take sides in this matter. By the end of the session, the Dow Jones Industrial Average was down 23 points; the broader S&P 500 Index was off six points; and the NASDAQ was lower by 25 points.
Market breadth showed a mixed market, with winners about even with losers on the NYSE. The major stock market sectors were divided, as large losses in the technology and basic materials issues were partially offset gains in the utilities and services stocks.
The economic news was not too encouraging today. Specifically, retail sales slipped 0.3% in the month of September, where a much stronger figure had been anticipated. In addition, business inventories were unchanged during the month of August, where analysts had been looking for a modest increase. Tomorrow will be a busier day for economic news items. Of note, housing starts and building permits for September are due out. The latest weekly jobless claims figures will be released and may shed some light on the employment situation. Furthermore, the monthly industrial production report will be closely followed.
In the corporate arena, the third-quarter earnings season is now under way. Of note, shares of Bank of America (BAC) advanced after the financial giant posted encouraging numbers. In addition, United Airlines (UAL) stock moved higher after that company posted strong results, accompanied by an upbeat outlook. Looking ahead, a number of big names will weigh in with their reports over the next few days, and that may help provide some direction to the market.
Technically, the S&P 500 Index is looking to break through the widely-watched 3,000 mark. A few attempts to breach this level may be needed. A solid batch of corporate reports might serve as the catalyst for such a move.
– 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
The stock market, consumed for the past several weeks by the ebb and flow of global trade news, most specifically as it pertains to the U.S.-China standoff, looked a bit past that drama yesterday morning to focus on the official start of third-quarter earnings reporting season. That event, also closely watched by Wall Street, featured some household names among the early companies posting net results. Two prominent stalwarts reporting were components of the Dow Jones Industrial Average, UnitedHealth Group (UNH - Free UnitedHealth Group Stock Report) and banking giant JPMorgan Chase (JPM – Free JPMorgan Chase Stock Report). Both issues stormed ahead on stronger-than-expected results.
This dual company surge, especially the shares of the former, helped lift the Dow to a more than 300-point gain by mid-morning. That run-up pushed the blue-chip composite to within 300 points, or so, of an all-time high. Healthy increases also were inked by the other indexes, with the tech-driven NASDAQ improving by a little over 100 points as the morning concluded. The NASDAQ was the best performer of the large-cap trio (also including the S&P 500, with an advance of 1.25% at its morning zenith). The strong start to earnings season is helping to offset some logical nervousness on the trade front regarding China.
To this point, nearly three dozen S&P 500 issues have issued third-quarter results and more than 80% have topped their consensus forecasts. In addition to earnings, Wall Street has gotten a lift from upbeat news on the Brexit front, where tense negotiations with the United Kingdom and the European Union were seemingly leading to some strides toward a deal. An EU negotiator indicated that he felt a deal was possible this week. This strong up move yesterday morning followed a muted semi-holiday session on Monday, in which the averages all stayed near the breakeven line.
The strong gains then would carry over into the afternoon, with the bulls pointing to the upbeat profit reports as the cause of this sustained upswing in equity prices. As to trade, there continue to be reports that China wants further talks before it will sign onto a deal. That is posing some concerns for the market. Still, the earlier strong gains were persisting as the afternoon moved along, with the Dow and the NASDAQ both climbing above the 300-point and 100-point advance mark as the session started to edge into its latter stages. The after-market and this morning would see additional profit issuances.
The market's advance then would continue into the late afternoon and the close, with Corporate America taking the center stage for at least one day and likely additional ones, as closure on the trade front might be some time off. As the final bell sounded, the Dow would conclude matters ahead by 237 points; the S&P 500 would finish up 30 points; and the NASDAQ would rise by an even 100 points. Gainers, meantime, would swamp losing issues; Treasury note yields would add to their recent rally, with the 10-year note inching up to 1.77%; and the VIX would drop meaningfully on the perception of falling risk.
Looking ahead to a new day now, we see that stocks were mixed in Asia overnight, while they are a bit lower in Asia this morning. Elsewhere, oil prices are up slightly and Treasury note yields are essentially flat. As to our futures, the early read is for a lower opening on Wall Street 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.
