After The Close
The stock market moved strongly higher this morning, and managed to maintain these gains through the afternoon. Of note, a batch of solid corporate profit reports likely helped fuel today’s advance. At the end of trading, the Dow Jones Industrial Average was up 187 points; the broader S&P 500 Index was ahead 21 points; and the NASDAQ was higher by 87 points. Market breadth showed widespread support for stocks, as advancing issues easily outnumbered decliners on the NYSE. Leadership was seen in the technology and consumer sectors. In contrast, the energy stocks and utility names were areas of weakness.
It was a busy day for economic news. Initial jobless claims moved up to 249,000 during the week of November 11th; a lower reading had been anticipated. Elsewhere, industrial production increased 0.9% in October, which was a better-than-expected showing. Tomorrow, we get a look at housing starts and building permits for the month of October.
Elsewhere, in the corporate arena, a number of widely-followed companies posted reports over the past 24 hours. Specifically, in the technology arena, shares of Cisco (CSCO – Free Cisco Stock Report) and NetApp (NTAP) moved higher in response to well received reports. In the retail space, shares of Wal-Mart (WMT – Free Wal-Mart Stock Report) also surged after the retailer delivered a solid issuance.
Technically, the stock market firmed up considerably today. In addition to some good news on the corporate front, the Administration’s tax reform effort seems to be making some progress, with passage by the House.
— 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, under mild closing pressure for the past couple of sessions, opened notably to the downside yesterday morning. Behind the early selloff, which took the Dow Jones Industrial Average quickly down more than 165 points, were worries about the reversal in the overseas equity markets earlier in the day. The markets had been off both in Asia and then in Europe. Declining commodity prices, including lower oil quotations, gave off hints that the global business expansion may be seeing some headwinds. The concerns about a possible global business slowdown have been causing some consternation stateside this week.
But it is hard to keep these resilient bulls down for long, and as the morning droned on, the losses withered. This had been the pattern on Tuesday, when a triple-digit early Dow loss had been largely erased by the close. Meanwhile, although the aggregate market moved lower during the first half of the trading session, there was some bargain hunting in several distressed names, such as General Electric (GE - Free General Electric Stock Report) and Teva Pharmaceuticals (TEVA). Overall, though, stocks weakened, but as the morning concluded, they were well off of their initial lows.
As the afternoon got under way, the market remained weaker, with many more stocks heading downward than rising in price. In other news on this middle session of the week, data issued early in the morning showed that retail sales, a big gainer in September, when spending surged by 1.9%, increased an additional 0.2% in October. The latest modest gain was fueled by greater spending at motor vehicle and parts dealers, at electronics stores, and at clothing and accessories outlets. Interestingly, sales over the Internet eased somewhat during the month.
Then, there is inflation, where a key report on consumer prices was released early yesterday morning. Here, the latest month saw a scant 0.1% increase in October, following a 0.5% jump during the prior month. For the last 12 months, the CPI was up 2.0%. The latest reports should not change the current outlook, which calls for the Federal Reserve to raise interest rates at its meeting next month. Taking all of this in, the market seemed, at the time, poised to post a material loss for the day, as stocks seemed to be weakening somewhat again as the afternoon got under way.
Such perceptions proved to be on the mark, as the averages, albeit with a few half-hearted rally attempts from time to time, mostly trended lower as the afternoon moved along. Worries about global growth, the increasing prospect of higher interest rates (with inflation now perhaps on the march), and an uncertain road ahead for tax reform, especially as new twists and turns seem to appear on almost a daily basis combined to again take the measure of the bulls. Things then stayed the same as the session moved to its conclusion.
In all, the market ended notably lower, with the Dow falling 138 points; the S&P 500 Index shedding 14 points; and the NASDAQ descending 32 points. Losses approximating half a percentage point were seen by the S&P Mid-Cap 400 and the small-cap Russell 2000. Also, nearly all of the 10 major equity groups posted losses, with the biggest deficits in the consumer non-cyclical area and the energy group. Only the telecom sector eked out a nominal advance, while losing stocks led gaining issues on the Big Board by a hefty nine to five margin. All in all, it was an unimposing session.
Looking ahead to a new day, we see that stocks across Asia followed up the prior day's sharp retreat with some gains overnight. In Europe, the major bourses are tracking higher, as well, at this hour. In other markets, oil, a loser for several days now, is seeing early losses once more, but interest rates, off again yesterday, are rebounding thus far this morning. Finally, U.S. equity futures, following noted weakness the prior two sessions, are now showing notable gains in early action.
— Harvey S. Katz, CFA
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
