After the Close
The U.S. stock market put in a mixed session today. Specifically, the Dow Jones Industrial Average, which displayed clear leadership, advanced 218 points; the broader S&P 500 Index made lesser progress. However, the technology heavy NASDAQ, which pulled back quite sharply at one point today, closed down 42 points. Market breadth showed a divided session, with advancers about even with decliners on the NYSE. From a sector perspective, the financial and industrial issues pressed nicely ahead. In contrast, the technology, consumer noncyclical, and the utility stocks posted large losses.
Traders received one notable economic release this morning. On the employment front, initial jobless claims dipped to 254,000 for the week ended November 5th, where analysts had expected a somewhat higher number. Clearly, the nation’s labor market continues to show signs of improvement at this stage of the economic recovery. However, it remains to be seen if the Federal Reserve will lift interest rates later this year. Tomorrow the University of Michigan releases the preliminary figures for its October consumer sentiment report.
Elsewhere, the third-quarter earnings season continues, as a number of companies reported their results over the past 24 hours. In the retail space, shares of Kohl’s (KSS) rose sharply in response to a better-than-expected release. But, things did not go as well for Silver Wheaton (SLW). That stock sank, after the precious metals company posted a weak report.
Technically, the stock market has picked up over the past few sessions. The S&P 500 Index is now close to the 2,170 mark. Pushing the index past the 2,200 level will likely be the next key challenge for the bulls. - 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 - 12:10 PM EST
The U.S. stock market continued to exhibit mixed results in the second morning of trading since the Presidential election. Voters tapped Donald Trump to lead the nation, a surprising end to what was among the most hotly contested, acrimonious races in modern history. And while the markets appeared to favor Mr. Trump’s opponent in the weeks leading up to voting day, the volatility has been considerably more muted since he delivered his victory speech. In fact, each of the three major market indexes are on track for full-week gains, with the Dow Jones Industrial Average poised to have its best five-day session so far in 2016, reaching an all-time intraday high in the Dow Industrials.
Of the ten principal market sectors, the healthcare and financials groups have been the biggest gainers since the President-elect’s triumph. Investors are likely reassessing deals that were made in preparation for a Hillary Clinton administration, which would ostensibly see heightened regulation in the pharmaceutical and banking spheres. Financial prospects of the former are notably brighter, as overhauling the Affordable Care Act appears to be a top priority for the new administration.
Still, some areas remain mired in uncertainty following the election. The NASDAQ, in stark contrast to its peers, lost as much as 2% in aggregate value today. Though the tech-laden group had recouped some of its losses as we closed in on the midday hour, softness in the technology sectors persist. Non-cyclical consumer goods, telecom, and utilities stocks have also fallen this morning. The market will likely continue to try and grasp the impact of the election for some time. In fact, until policies are defined and enacted, it remains to be seen what issues, fiscal or other, the new Commander-in-Chief will focus on in his first 100 days in office.
Elsewhere, away from the political front, the Labor Department reported that U.S. jobless claims dropped 11,000, to 254,000, last week. This is an impressive beat of consensus estimates, which predicted the number of Americans filing for unemployment benefits would come in closer to 260,000. This ought to stoke those on Wall Street clamoring for a rate hike from the Federal Reserve. The case for a raise to interest rates has been mounting for months, only to face delays related to the Presidential election and what has been described as slow-but-steady economic growth. In our view, the central bank risks destabilizing trading if it fails to offer a concrete policy plan at its December meeting.
As the noon hour approached in New York, early-morning momentum appears to have waned. As a whole, the market looks largely directionless, with small-cap stocks outperforming and offsetting uncertainty amongst large-cap equities. Advancing and declining stocks are mostly even, as investors continue to grapple with the impending transition of executive power. As ever, 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
The U.S. equity futures plummeted in the minutes following the early strong signs that Donald J. Trump would win the Presidency. But after that initial selloff, which pushed the futures on the Dow Jones Industrial Average down some 800 points in pre-market dealings and prices soundly lower in an array of markets overseas, fears of the impact of Trump victory quickly eased, so that by early morning, more modest declines seemed ahead.
Then, after that pre-market comeback, the U.S. stock market opened on a mixed note, but quickly turned higher. And as we approached the noon hour in New York, the Dow had surged to a gain of nearly 200 points, securing the ground above 18,500 for the time being. The small- and mid-cap indexes (the Russell 2000 Composite and the S&P Mid-Cap 400, respectively) did proportionately better, while the NASDAQ lagged somewhat.
Behind this rethinking in the wake of Mr. Trump's stunning victory, which led some heretofore struggling groups, such as the steels, the heavy construction companies--such as Dow component Caterpillar (CAT- Free Caterpillar Stock Report)--and the drug makers to move strongly higher is the expectation that Mr. Trump's win will aid certain industries. Also helping the market is a sense that this victory, being that it went along with the Republican Party's continuing control of Congress, could lead to some decisive action.
Of course, all of that is in the future, and there is no assurance that things will go as planned. But for now, a honeymoon period of some note appears to be evolving in the government and the financial markets. Thus, it is possible that a quick start could take hold after the President-elect takes over in January. As to the stock market, the afternoon began with formidable gains still in place. In fact, they were increasing.
The market then strengthened further as the afternoon rolled on and the earlier cited 200-point Dow gain would soon exceed 300 points, with the semi-inclusive advance being headlined by stealthy gains in the health care, basic materials, financial, energy, and industrial sectors. However, this was not a tide that lifted all boats. On point, the utilities were lagging as were the consumer noncyclical stocks. Also advancing issues just held a narrow lead on declining stocks in late afternoon.
Looking at the day's action, the effect of a Trump victory may be wide ranging, from trade policy, to foreign affairs, to tax changes. So, there could well be a wide range of outcomes that might cause a spike in volatility in the near term. For now, though, the bulls are seemingly ready to give the incoming Administration an early vote of confidence--at least for one day. As to the long-term effect of these pending changes, the fundamentals remain sound, so the bull market should persist.
Meanwhile, the market rose a little further during the last hour of trading, at least for a time, with the Dow Industrials driving to a gain above 300 points at its peak, before settling back somewhat as we neared the close. In all, the final tally showed this blue chip composite posting an increase of 257 points. The S&P 500 Index chipped in with a 24-point rise and the NASDAQ, which had lagged for much of the day, ended higher by 58 points, or better than 1%.
As before, however, there was some split between the various groups, so that the final market breakdown was not as impressive as the performance of the leading averages. That is especially so for the small-cap Russell 2000, which led the way with an increase of more than 3%. Also, advancing issues just narrowly led declining stocks on the Big Board at the close, along the lines of 17 to 13. There also was a fairly even breakdown between gaining and losing groups.
Still, the day ended a lot better than seemed would be the case early yesterday morning. Now, we look ahead to a new day, and cast our eyes overseas where the principal markets are surging so far today, led by Japan's Nikkei, which surged by almost 7% in overnight trading. On the home front, the equity futures are pointing to a higher open this morning, as traders strive to further digest the Presidential election. - Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
