After The Close
The stock market got off to a weak start this morning, but managed to selectively firm up as the session progressed. At the close of trading, the Dow Jones Industrial Average was ahead 124 points; the broader S&P 500 Index was up six points; while the technology-heavy NASDAQ was lower by 11 points. Market breadth showed a mixed situation, as advancing issues slightly outpaced decliners on the NYSE. Many equity groups managed to make progress today, led higher by the healthcare, utility, and basic materials issues. In contrast, the technology stocks and selective consumer names retreated.
Traders received just one notable economic release today. Specifically, industrial production advanced 0.1% in October; a stronger showing had been expected. Elsewhere, investors paying attention to the global economy, were likely pleased with comments from President Trump, suggesting that a trade deal between the United States and China may be forthcoming.
In the corporate arena, a few earnings reports made the headlines over the past 24 hours. Specifically, in the technology area, shares of Nvidia (NVDA) moved sharply lower after that company issued decent results, but a weaker-than-anticipated outlook. In the retail space, shares of Williams-Sonoma (WSM) also came under pressure in response to a disappointing release.
Technically, the equity market has been quite volatile recently and seems to be having trouble resuming a meaningful advance. While the economy on our shores has been holding up well, traders may be worried about some of the problems overseas.
– Adam Rosner
At the time of this article’s writing, the author had a position in Nvidia (NVDA).
Before The Bell
Another day, another decline for Wall Street. Well, at least that was the theme yesterday morning, as the Dow Jones Industrial Average, off for five days in a row, fell further in early trading, quickly losing more than 100 points as the first half hour passed. Most of the other indexes also pulled back. Giant retailer Walmart Inc. (WMT – Free Walmart Stock Report), which inked uninspiring quarterly results, led the move lower, as did other consumer discretionary stocks. Energy and utility stocks also slid, as sentiment remained bearish amid mounting concerns about slowing global growth.
As for Walmart, the retailer posted mixed results, but did raise its forecast for earnings and same-store sales for the full year. Also doing well following an upbeat quarterly release was fellow Dow component Cisco Systems (CSCO – Free Cisco Stock Report). That issue rallied more than 4% early in the session. Cisco seems to be one of the few technology companies that is not facing immediate headwinds from our frayed trade relations with China. However, such good news was again countered by concerns about rising interest rates, Federal Reserve monetary policies, and fears of a deepening economic slowdown globally.
So, stocks continued to sell off as the morning progressed, with losses in all of the indexes. That ballooning setback followed some early nominal strength in the NASDAQ, most likely on the Cisco improvement. As to the central bank, Fed Chair Jerome Powell said in an interview on Wednesday that due to the nation's ongoing economic strength that the markets should get used to the idea that the bank could hike interest rates at any time over the next year. The lone discordant note he struck was to acknowledge that the global economy was not as strong as it had been. But stateside, he opined that growth was still on the rise.
Meantime, in other news, the U.S. Census Bureau reported that retail sales for the month of October rose a solid 0.8%. That strong tally was higher than both the revised September figure (of a decline of 0.1%) and expectations for October, which had retail sales gaining 0.5%. Monthly strength was noted at electronic and appliance stores, general merchandise outlets, and over the Internet. The improvement was especially notable at department stores. All of this should augur well for the coming Christmas selling season, which is the dominant one for the nation's retailers.
However, this good news had little effect on trading as the morning progressed, and the market's slide was gaining momentum as the morning wound down, with the Dow's loss ballooning to nearly 300 points after the first 90 minutes of the session. Then, reports surfaced that the United States and China were again attempting to defuse the harsh trade war rhetoric. That new helped to stop the market's descent in its tracks, and by the noon hour the session had a mixed look to it. Then, as the afternoon began, the buyers returned in droves, and as we moved inside the final two hours, the Dow had surged to a gain of more than 250 points.
The NASDAQ. meantime, did proportionately better, soaring by better than 100 points, on a comeback in shares of Apple (AAPL – Free Apple Stock Report), the tech behemoth that had been a big factor in the early week selloff on the Street. The market then kept most of its afternoon gains into the close, and when the final tallies were added up, we saw that the Dow Industrials had gained 209 points, staging an almost 500-point upward reversal. The S&P 500 climbed 29 points and the NASDAQ, on tech strength, added 123 points. Strong gains also were inked by the S&P Mid-Cap 400 and the small-cap Russell 2000.
Now, the final day of this hectic week is under way, and for starters, we see that stocks were mixed in Asia in the overnight hours, while they are weakening a bit in Europe so far this morning. Elsewhere, oil prices are up on supply cut indications and Treasury note yields are down slightly after a flattish performance yesterday. Finally, ahead of release of critical data on industrial production and factory utilization, the U.S. equity futures are pointing to early losses, with softness in the chip sector and worries about turmoil regarding Brexit concerning investors. Stay tuned.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
