After The Close
Stocks got off to a mixed start this morning, pushed selectively higher by some of the blue chip names. However, weakness in some of the big technology issues put a damper on market sentiment, eventually causing the broader averages to fall into negative territory. Traders sifted through a mixed batch of earnings reports this morning, while keeping an eye on the economy. At the end of the day, the Dow Jones Industrial Average was down 19 points; the broader S&P 500 Index was off three points; and the NASDAQ was lower by 49 points. Market breadth showed a divided session with winners about even with losers on the NYSE. The healthcare and industrial stocks made some positive strides, while the technology stocks took a step back.
Meanwhile, a couple of key economic news items were released this morning. Specifically, the consumer confidence index for October dipped to a reading of 125.9; a somewhat better showing had been anticipated. In contrast, pending home sales rose 1.5% for the month of September, which was a respectable reading. Tomorrow, we get a look at the advanced GDP number for the third quarter. In addition, the FOMC will wrap up its two-day meeting with an interest-rate decision and some remarks. According to the consensus view, another reduction in rates (0.25%) is expected. Looking further out, the government will deliver the monthly employment report on Friday.
In the corporate arena, the third-quarter earnings season is in full swing. We recently received solid reports from Pfizer (PFE – Free Pfizer Stock Report) and Merck (MRK – Free Merck Stock Report). Both of those stocks moved nicely higher today, fueling a good advance in the broader healthcare group. Things did not go as well for Alphabet (GOOG). That stock moved lower in response to a weaker-than-anticipated report, and likely pulled down some other technology names in the process.
Technically, the market has come a long way over the last few weeks, driving the S&P 500 Index to record high ground. Looking ahead, much will depend on the corporate outlook and the progress made on the trade situation in China to see if further records are set.
– 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, fresh off of a nice win on Friday and a constructive last week in general, began the final week of October on a strong note, with the averages propelled forward by a combination of solid third-quarter earnings and optimism that at least a partial trade deal can be brokered with China in the coming weeks. So, armed with this nifty one-two punch, the stock market roared ahead yesterday morning, with the Dow Jones Industrial Average quickly jumping out to a gain north of 200 points.
Along with the Dow's advance, came a sharp run-up in the NASDAQ, as that index, boosted by solid gains in the tech group, posted an early morning advance of more than 80 points. But the big headline maker was the S&P 500 Index, which jumped ahead by just over 20 points, reaching an all-time high in the process. The market then took something of a breather as the morning wound down, and that better than 200-point Dow win was halved as we reached the noon hour in New York. But the NASDAQ continued to firm up.
Among the major movers yesterday was AT&T (T). The old-line giant and erstwhile component of the Dow rose almost 5% in early action, reaching a 52-week high in the process, with the stock pushed higher by the company's report of a slight profit beat and the announcement of a goal to retire a good chunk of the debt it acquired to strike the Time Warner deal. In all, the stock is up close to 50% since bottoming out earlier in the year. Other big names have done well recently, such as UnitedHealth (UNH – Free UnitedHealth Stock Report), which continued the upward trend yesterday.
Meanwhile, aside from the continued flow of corporate earnings, the current week will by full of economic news and releases. To start with we will be getting the Conference Board's survey on consumer confidence a little later today. That will be followed the conclusion of the Federal Reserve's FOMC meeting on Wednesday afternoon. It is widely expected that the central bank will announce another interest-rate cut (its third this year) at that time. The week then will conclude with two big reports on Friday, the jobs issuance and the ISM survey on manufacturing.
As to the afternoon's action, the Dow continued to give up some more of its initial advance, falling back to a more modest 80-points increase as we moved into the 1:00 PM (EDT) hour. The bulls would then stand their ground and lift the market back further into the green during the balance of the afternoon. In fact, as we reached the 2:00 PM (EDT) mark, the Dow had its triple-digit point increase back again, finally ending matters with a nice 133-point surge. The S&P 500 and the NASDAQ also did well, as did the small-cap Russell 2000.
Now, a new day dawns and in a session that will see the start of the Federal Reserve's two-day FOMC meeting and the issuance of the October report on consumer confidence, we see that stocks in Asia were mixed to lower in the overnight hours. In Europe, meantime, the Continent's bourses are trading with initial losses. In other markets, oil prices are down and Treasury notes, which yesterday climbed above 1.85%, are now at 1.82%. Finally, the U.S. equity futures are pointing to an uneven opening this morning.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
