After the Close
The U.S. stock market managed to move higher for much of the session, before paring its gains considerably in the final hour of trading. At the end of the day, the Dow Jones Industrial Average was ahead roughly 24 points; the broader S&P 500 Index was up three points; and the NASDAQ was higher by 11 points. There was a mixed quality to the market, as advancers were just about even with decliners on the NYSE. Some of the major equity sectors made progress, helped by solid gains in the healthcare and financial issues. However, the energy and materials issues weighed heavily on the market, accompanied by an almost 4% decline in the price of crude oil.
There were a couple of economic reports released this morning that may have positively influenced traders. Specifically, according to the second estimate, the nation’s GDP increased 3.2% during the third quarter. This figure was slightly better than many economists had expected. Furthermore, the Conference Board’s Consumer Confidence Index came in with a reading of 107.1 for the month of November, which exceeded expectations. Tomorrow will be a busy day for economic news, too. Automatic Data Processing (ADP) will deliver its employment numbers for the month of November. Many traders will likely be looking closely at this issuance, given that the government is slated to issue its monthly jobs report at the end of the week. In addition, tomorrow we will get a look at the monthly pending home sales figures, as well as the Federal Reserve’s Beige Book summation for the month of November.
In corporate news, a couple of widely held companies weighed in with their results today. Specifically, shares of Tiffany & Co. (TIF) moved up in response to a better-than-anticipated report. In the healthcare space, shares of Mallinckrodt (MNK) declined, as investors were not too happy with that company’s outlook.
Technically, traders seem to be having some difficulty pushing the S&P 500 Index further beyond the 2,200 mark. Of note, this area did present some resistance on a few occasions over the summer, so a few attempts may be needed to surpass that barrier. - 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
After some overdue profit taking in an overbought stock market yesterday, Wall Street began the session today with hopes of fashioning a Monday-Tuesday reversal. To be sure, the Street did not have all that much ground to make up, as stocks had wilted only modestly to open the new week, with the Dow Jones Industrial Average, for example, easing back by just 54 points after some three weeks of steady gains in the wake of the stunning election victory by Donald J. Trump. Still, buoyed by some constructive economic metrics, the market began the latest session somewhat to the upside.
As to the economic supports, there were two of some import. First, the Commerce Department reported at 8:30 this morning that the nation's economy, which initially had been estimated to have grown by a solid 2.9% in the third quarter, following minuscule increases of 0.8% and 1.4%, respectively, in the first and second periods, now appears to have gained even more traction during the recent three months, as the report showed a 3.2% advance for that span. The better tone in the period, meantime, reflected a stronger contribution from consumer spending than had been estimated initially and a lesser contribution from inventory restocking. All in all, it was a solid issuance.
Then, at 10:00 AM, the Conference Board, a New York-based private research organization, reported that its survey on Consumer Confidence had surged to 107.1 in November. This was the strongest reading in nearly a decade, was materially better than the 101.2 estimate, and even further ahead of October's 98.6 survey result. The survey, a closely followed barometer of consumer attitudes, measures confidence toward business conditions, jobs, and personal financial conditions. According to Lynn Franco, the Director of Economic Indicators at the Conference Board, confidence is back again at pre-recession levels.
So, armed with these twin reports, which along with generally upbeat Cyber Monday indications from the retailing sector, the stock market is thus far resisting the temptation to take further profits. However, there is clearly no stampede to buy either, and as we head toward the noon hour in New York, the Dow is up 30 points; the S&P 500 Index is better by seven points; and the NASDAQ, boosted by some strength on the tech side, is up by 32 points. Also of note, the Russell 2000 Composite, which has been a source of strength in recent weeks, is again heading higher after a one-day respite, with a modest gain of three points.
As such, we may yet fashion a Monday-Tuesday reversal, although, in truth, the market is looking a bit tired in here having had a near uninterrupted run for the past three weeks. So, we would not be surprised to see additional profit taking in the not-too-distant future, especially if tomorrow's scheduled OPEC meeting on production limits fails to secure some progress, or if Treasury note yields, now up close to 2.4% on the 10-year benchmark instrument, move much higher. For now, though, enjoy the rarified air above Dow 19,000 and stay tuned for further updates. - Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before the Bell
Wall Street started out the final few days of November and the first full session following the Thanksgiving holiday with some early losses, as investors awaited more results from the stores on Black Friday and Cyber Monday. Thus far, the early indications are that the results were decent, but not eye-catching, although, on balance, Internet buying appears to have been quite strong. The Street also will be watching for news out of OPEC this week, as the leading oil ministers will be meeting tomorrow amidst speculation about possible output reductions to bolster prices. On that count, OPEC's top producer, Saudi Arabia, has suggested it might balk at any cuts in production. Meanwhile, oil prices, which moved higher yesterday, are likely to remain volatile in the days and weeks to come.
As to other concerns--which come amidst the marked surge in equity prices over the past three weeks--a main one would seem to be interest rates. To recap, for much of this year, the major rate worries had focused on the Federal Reserve and whether or not the central bank would be raising borrowing costs this year. All the while, government interest rates, themselves, had been languishing near historic lows, with the yield on the 10-year Treasury note, for example, falling below 1.5% over the past summer. In recent months, and especially since the election, however, those rates have surged, with the 10-year note's return climbing to just under 2.4% late last week before modest backtracking yesterday.
In light of this pickup in yields, sentiment has evolved regarding the Fed's next move, with a clear majority of pundits now speculating that the central bank will raise rates when it meets next month. As to notes and bond yields, even with a modest descent yesterday, rates on the 10-year Treasury dipped back to 2.32%. Borrowing costs are now sufficiently high for some to suggest we are anywhere from a quarter to a half point away from yields that may become a concern for the stock market.
Be that as it may, the morning setback was never severe, and by noon in New York, the one-time 80-point, or so, loss in the Dow Jones Industrial Average had been more than halved, while the losses in the other indexes had been pared back, as well. The Russell 2000, the big winner since the election, also had taken a step back, but it, too, was then somewhat above the day's low. A further recovery, however, did not evolve as the afternoon unfolded. In fact, here was some additional backtracking in the core averages, with the moderate morning lows being revisited by some of those composites.
This brake on the intra-session comeback, meantime, was very brief, as the temptation to take profits following the strong run-up to all-time highs in the Dow, the S&P 500, the NASDAQ, and the Russell 2000 remained relatively intense. So, the red ink persisted, but in comparatively small amounts through the late afternoon and finally into the close.
Thus, when all the numbers were tallied up, the Dow-30 had retained 54 points of its approximate session-worst loss of 80 points; the S&P 500 Index was off by almost 12 points; the NASDAQ was lower by 30 points; and the Russell 2000, the small-cap composite that has led the post-election charge for the bulls, was in the loss column by more than 17 points--its first setback in 15 sessions.. On the day, the erstwhile big post-election winners, such as the banking stocks, were among the bigger casualties, while some less-in-favor groups outperformed. Oil, however, rose on the day, gaining some 1.8%, although closing somewhat off its high for the day.
Looking out now at a new day, and with the Dow still sitting above the 19,000 mark, we find that stocks were mixed to higher in Asia overnight, while they are generally higher in Europe so far this morning. As to our futures, the early read is modestly positive, with the Dow futures up about 30 points and the S&P 500 Index futures up almost five points. So, a Monday-Tuesday reversal would seem quite possible at this point.
Finally, in news just released, the Commerce Department has reported that third-quarter GDP, initially estimated to have risen by 2.9%, has been revised to show a 3.2% increase. Also, the mix of contributions was better, with an upward revision in consumer spending from the initial third-quarter issuance and a lesser build in inventories than earlier reported for the period. On the other hand, business investment advanced more slowly than initially calculated. - Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
