After The Close
The futures market started in the red today, as a slew of companies released quarterly earnings reports, both after the bell yesterday and before the open today. Cisco Systems (CSCO – Free Cisco Stock Report), a Dow-component, issued a subpar revenue outlook, dragging down the Dow Jones Industrial Average. However, a decent report out of Walmart (WMT – Free Walmart Stock Report), helped push the market higher. Throughout the day, the composites were choppy, as they reacted to news reports, including one that the Speaker of the House, Nancy Pelosi, stated that a breakthrough on the USMCA could be imminent. Still, the market has benefited from several days of upward momentum, and it appears that traders were taking profits throughout the day, causing mixed price performances by the stock exchanges. However, the markets trended back to about breakeven in the final portion of the session, and the S&P 500 reached an all-time high by the close. All told, the Dow closed down two points, the S&P 500 was higher by three points, but the NASDAQ was lower by three points.
Moreover, market breadth was largely directionless today. Materials stocks were among the best performers on the day, while energy issues were among the weakest.
In commodity news, oil prices were lower today, as concerns about oversupply hit the market. Meantime, U.S. Treasury bond yields were off across the board as demand for the safe-haven asset increased. Too, this move had long-term rates falling more than those with shorter terms. Usually, this outcome is negative for financial companies. The VIX Volatility Index was higher today, as demand for options protection rose a bit.
Looking ahead, tomorrow will have a significant amount of economic news, which will provide a broad picture of how the business environment is faring. This list includes business inventories for September, and industrial production and retail sales for October. Too, a slew of earnings reports will be released both after the bell today and before the open tomorrow, which will likely affect market prices. Also, any developments in the U.S. trade negotiations with China will probably drive trading sentiment.
– John E. Seibert III
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
Before The Bell
The stock market, in a seesaw trading pattern in the early going this week, with the averages holding at record levels, but finding it difficult at these rarified levels to make notable additional headway, saw incremental profit taking as the session began yesterday. Selling in Asia and Europe in the overnight hours and earlier Wednesday morning, respectively, as protests raged in Hong Kong, made for initial tough sledding. But the selling was comparatively brief, and as we approached the noon hour in New York, the Dow Jones Industrial Average, once off by just over 100 points, had moved into the green by close to 40 points.
It was a similar story for the S&P 500 Index and the NASDAQ, with both composites shaking off their initial doldrums to edge into the black. Helping the blue chips were modest gains in several consumer names, including Procter & Gamble (PG – Free Procter & Gamble Stock Report). Also tech icon Apple Inc. (AAPL – Free Apple Stock Report) jumped ahead to yet one more all-time high on continuing optimism in that sector. Influencing early trading was an uneven set of financial news. On point, China and the United States continue to be at odds over attempts to fashion a phase one trade accord. There seem to be questions over whether or not our country will remove tariffs ahead of any détente.
At the same time, Federal Reserve Chair Jerome Powell, in an address before Congress, said that the path of interest rates may not change as long as the economy keeps growing. Such remarks are not likely to sit well with the President who has called for further cuts in borrowing costs. At the same time, while raising the bar for future rate reductions, he also suggested that with challenges remaining that the lead bank would refrain from hiking rates anytime soon. That admission seemed to mollify Wall Street. Thus, as the morning ended, the market was grudgingly higher.
The market would push forward in the afternoon, with the big boost coming from a 10-point plus surge in shares of entertainment giant and Dow component Walt Disney (DIS – Free Walt Disney Stock Report). That stock attracted dramatic buying on word that the company already has 10 million subscribers to its streaming services. Moreover, it estimates that it will have between 60 million and 90 million subscribers by 2024. The jump in Disney stock lifted the Dow into the green by more than 100 points, easily putting that index at the head of the class in another wise unprepossessing market session late in the day.
Meanwhile, on the data front, the Labor Department reported that the Consumer Price Index rose a bit more than forecast in October, gaining 0.4%, which was a little above the consensus target rise of 0.3%. That uptick suggests that the economy now is pressing ahead modestly and in no danger of falling into recession anytime soon. The market would then continue to press forward selectively into the close, with the Dow and the S&P 500 gaining 92 points and two points, respectively. The NASDAQ and the smaller-cap indexes would wilt a bit though.
Looking ahead to a new day now, and following the Disney-led charge by the Dow yesterday, the major markets were mixed in the overnight hours in Asia. Meantime, on the Continent, the early read on the European bourses is a bit lower. Elsewhere, oil prices are up and Treasury note yields, down to 1.87% yesterday, are at 1.85% so far this morning. Finally, the U.S. equity futures are pointing to an uninspiring opening this morning. As to the latest session, activity will again be influenced by trade relations with China and persisting concerns about a prospective deal with that country.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
