After the Close
The stock market put in a mixed, but somewhat constructive, performance today. At the close of the session, the Dow Jones Industrial Average was ahead 40 points; the S&P 500 Index was off three points; and the technology heavy NASDAQ was ahead 28 points. Market breadth showed a slightly positive tone to today’s session, with advancers modestly ahead of decliners on the NYSE. Meanwhile, the major equity sectors were divided. Specifically, the consumer cyclical stocks and the technology names managed to make progress. However, the energy and materials issues were quite weak, possible due to lower crude oil prices and the stronger dollar.
It was a light day for economic news, featuring just one notable item. According to the preliminary reading, the University of Michigan’s consumer sentiment survey came in at 91.6 for the month of November, which was slightly better than had been expected. This report is important, given that the consumer plays a vital role in broader economy and we are just two weeks away from the start of the all-important holiday shopping season.
Meanwhile, the third-quarter earnings season has not yet ended. In fact, we heard yesterday afternoon from The Walt Disney Company (DIS - Free Walt Disney Stock Report). Shares of the media giant moved higher, as investors were feeling optimistic about the company’s outlook. However, things did not go so well for Michael Kors Holdings (KORS). Shares of the handbag and apparel manufacturer slipped after that company posted decent results, but tempered its outlook.
Technically, stocks have picked up nicely this week, following the Presidential election. The recent buying puts the S&P 500 Index near the 2,165 mark. However, it remains to be seen if the bulls can produce a meaningful buying campaign in the week ahead. Meanwhile, as the holiday season approaches, sentiment may brighten up. - 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’s post-election rally eased a bit on Friday, following a multiday winning streak by the bulls. The buying spree was experienced mostly among mid- and small-cap equities, with certain industries also ticking higher in reaction to Donald J. Trump’s notably reassuring victory speech. We suspect some profit taking has contributed to the modest selloff this morning. The S&P 500 has lost over 12 points so far today, largely due to the performance of the large-cap components.
Mr. Trump’s tough talk on job exporters and corporate tax responsibility has hurt the performance of technology stocks this week. Amazon.com (AMZN) has had a rough few days of trading, losing about 6% of market value since the opening bell on Wednesday. Also, CEO Jeff Bezos owns the Washington Post, a vocal opponent of Mr. Trump’s candidacy throughout the campaign, which may also be weighing on investor confidence in the e-commerce giant. Shares of Facebook (FB), Microsoft (MSFT – Free Microsoft Stock Report), and Alphabet (GOOG) will likely feel pressure if the President-elect follows through on promises to limit the breadth of visa programs that allow the tech firms to bring in essential talent. So, while the NASDAQ appeared to show signs of recovery in early morning trading, the tech-laden grouping had shed roughly 10 points at the midday.
Meanwhile, oil continues to struggle ahead of OPEC’s November 25th summit. The cartel will likely be unable to curtail production in the near term, as its recently released October output report has underscored the accelerated pace that inventory levels are growing. A group of member nations remain unwilling to slow down exports, boding poorly for those hoping that the global energy market stabilizes by the New Year. Accordingly, the energy sector has lost about 2.5% today, with Dow-30 constituents Exxon Mobil (XOM – Free Exxon Stock Report) and Chevron (CVX – Free Chevron Stock Report) down 1.5% and 1.0%, respectively, at the noon hour.
In addition to their ongoing assessment of President-elect Trump and the policies he may enact, investors are waiting on the Federal Reserve’s upcoming decision on interest rates. A continuous stream of positive economic data reports (this morning saw a surprisingly high 91.6 reading from the Index of Consumer Sentiment) has bolstered the case for a higher rate structure. The Fed’s Vice Chairman Stanley Fischer echoed that growing sentiment this morning, calling the likelihood of a hike in December “quite strong.” The voting member also reiterated the central bank’s goal of returning to 2% long-run inflation as employment continues to improve.
Each of the ten major market sectors are down today, and declining shares outnumber the advancing issues by a 1.5-to-1 split. Looking forward, we expect to see further volatility in the global currency exchanges, with Mexico and emerging nations feeling the brunt of the uncertain trade prospects. To be sure, certain pockets of the market will benefit from the new administration likely policies. The next few weeks ought to offer investors plenty of political and economic news to digest as January’s inauguration nears. – 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
Following yesterday's post-election victory lap by the bulls, the stock market sought to make it four consecutive winning days this week for Wall Street. To recap, after the stock market had fallen back steadily during the fortnight leading up to this eventful election week, things turned on a dime to start this five-day span, with a dramatic win for those long equities on Monday. Things settled down somewhat on Tuesday, but on word of Donald Trump's surprise win, stocks roared again on Wednesday, with a near wire-to-wire win, following a near-meltdown in the pre-market hours.
Indeed, the Dow Jones Industrial Average, once up more than 300 points on Wednesday on speculation about a smooth start to the new administration might be in the offing, settled in with an advance of 257 points. The indexes then pressed higher to begin the day yesterday, with certain groups, such as the heavy industrial providers, like Caterpillar (CAT - Free Caterpillar Stock Report), the banks, and the health care companies outperforming on hopes for a business-friendly environment up ahead. Better earnings news, meantime, helped to lift retailers, such as Kohl's (KSS).
However, there was a notable split in the market. Thus, while the Dow surged again by better than 275 points, to a record high, during the mid-afternoon hours, the S&P 500 Index was just incrementally higher for most of the day, while the NASDAQ, hurt by selling in many technology names, was actually modestly lower for much of the time. Also, there was a near even split between gaining and losing issues on the Big Board during mid-session, while four of the top 10 equity sectors fell sharply, led down by the consumer noncyclical group, which includes Dow component Procter & Gamble (PG - Free Procter & Gamble Stock Report), which fell sharply.
The market dichotomy then continued into the latter part of the afternoon, with the Dow also propelled higher by financial services behemoth Goldman Sachs (GS - Free Goldman Sachs Stock Report) and some industrial companies. The split reflected the fact as one pundit put it that stocks were adjusting to the change and uncertainty evolving in Washington with a Trump Presidency on the way. Losses in some high-profile tech and social media names, meanwhile, helped pressure the NASDAQ throughout the session. There also is a sense that higher interest rates are on the way, which is hurting the yielding stocks, such as the utilities and telecom issues.
The ability of the market to adjust to the new reality, meantime, is impressive and the quick turnaround in the stock markets in Great Britain and across the Continent after the surprise Brexit vote, may also be contributing to the better tone on Wall Street. So, as in the Brexit situation, the reaction may be positive after some initial uneasiness. Also bond yields are rising, with the return on the 10-year Treasury note climbing to 2.10%. The dollar, too, is gaining. The higher bond yields reflect a growing likelihood that the Federal Reserve will raise interest rates next month after failing to move the needle for the past year.
The market then stayed range bound in a mixed to higher mode into the close. The final tallies, meantime, showed that the Dow had added 218 points; the S&P 500 Index was marginally higher, but off its best levels of the day; while the NASDAQ and the NASDAQ 100 both remained notably in the red. The S&P Mid-Cap 400 and, especially, the small-cap Russell 2000 both ended nicely higher, while there was a split, as before, between gaining and losing stocks on the Big Board. However, at the close, in contrast to earlier in the day, the latter held the edge.
Looking out now to a new day, we find that stocks were generally lower in Asia overnight and are off somewhat in Europe thus far this morning. As to our futures, the Dow is little changed, while the S&P 500 Index looks ready to start the day somewhat lower. The big potential casualty, however, may again be the NASDAQ, which fell yesterday and looks as though it will open markedly weaker this morning, as traders digest the election and its implications for the financial world. Finally, oil continues to fall, with a barrel of WTI crude now a tick or two below $44 in New York. - Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
