After The Close
Though overall market breadth was largely mixed on Tuesday, some auspicious developments regarding tax reform helped to drive several pockets of the market higher. Financials, healthcare, and telecommunications stocks were the leaders, with technology and utilities (another one of Monday’s stalwarts) somewhat offsetting that optimism. So while the NASDAQ experienced a minor selloff following yesterday’s meaningful advance, the S&P 500 and Dow Jones Industrial Average delivered impressive growth. The latter was especially impressive, adding over 150 points at its midday peak. Sentiment was little unchanged into the final hour, with these two indexes holding range-bound patterns above their respective breakeven lines.
Mid-Day Update - 12:10 PM EST
The stock market is making solid progress today. At just past noon in New York, the Dow Jones Industrial Average is up 136 points; the broader S&P 500 Index is ahead eight points; and the NASDAQ is higher by seven points. Market breadth is favorable, as winners are ahead of losers on the NYSE. Furthermore, most of the major equity groups are in positive territory, with respectable gains in the energy, financial, and healthcare stocks. In contrast, the high-yielding utilities are quite weak today.
Meanwhile, traders received one notable economic news item this morning. Specifically, the Producer Price Index rose 0.4% in the month of November, which was in line with analyst’s expectations. The core number (excludes food and energy) was up 0.3% for the month. Tomorrow, the Consumer Price Index will be released. In addition, tomorrow afternoon the Federal Reserve will wrap up its two-day FOMC meeting with an interest-rate decision accompanied by a prepared commentary. Most on Wall Street currently think that a small rate hike (0.25%) will be implemented at this meeting.
Meanwhile, few corporations posted their financial reports over the past 24 hours. However, we did hear from Casey’s General Store (CASY). Shares of the grocery store operator are down sharply, as investors react to a disappointing report. In contrast, shares of KMG Chemicals (KMG) are soaring after that company delivered an encouraging report.
Technically, equities continue to march higher, as the end of the year approaches. It is hard to say if a large holiday rally will materialize, given the progress already achieved this year.
— 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
Wall Street began a data and event-filled week yesterday morning on a mixed note, with the Dow Jones Industrial Average initially ticking slightly lower, while the tech-driven NASDAQ moved out to an early gain. As we moved past the opening few minutes, though, the Dow started to strengthen, and as the morning moved along, the market had a modest upward bias to it. The major influence on trading yesterday was today's FOMC meeting, as the Federal Reserve prepares for what is likely to be the announcement of an interest rate hike tomorrow afternoon.
Meanwhile, stocks, as noted, began the session yesterday, at least after the first few minutes, pressing higher, after global markets had earlier registered gains in trading on optimism regarding solid economic growth indicators. In fact, the market's early showing likely would have been stronger except for news of an explosion in New York City's Port Authority commuter station, which the City's Mayor, Bill DeBlasio, described as an attempted terrorist attack.
The market then continued to press forward, underpinned by a further rise in oil quotations, with West Texas crude jumping to near $58 a barrel. That rise helped to lift a number of oil, and oil-related stocks. In economic news that might have some impact on the Fed, a report showed slightly fewer job openings in October than forecast. On the whole, though, there was little in the news that would excite or chagrin investors. Not surprisingly, the market would end the morning hours modestly higher and start out the second half of trading in similar fashion.
The stock market continued to drift higher as the afternoon proceeded, with the main focus being on the Fed and what the central bank would do with regard to rates and what it would say with respect to future interest rate decision. As noted, there is near unanimity that the lead bank will raise rates to 1.25% to 1.50% tomorrow. The big unknown, of course, is what it will suggest about 2018. Our sense is that the Fed will raise rates two to three times next year in quarter of a point increments.
Regarding individual stocks, technology did well, with the NASDAQ ultimately leading the way higher. And here, tech icon Apple Inc. (AAPL - Free Apple Stock Report) led the charge, with a 2% gain, to nearly $173 a share. Elsewhere, entertainment behemoth, Walt Disney (DIS - Free Disney Stock Report) gained notably, as well, closing more than 2% in the black. All told, the day saw the Dow add 57 points, the S&P 500 Index climb more than eight points; and the NASDAQ jump by 35 points. In the smaller-cap category, however, the Russell 2000 shed almost two points.
Looking out on a new day now, we see that shares in Asia were lower in overnight dealings, especially in China; the major bourses are right now pressing a tad higher in Europe. In other markets, oil, a winner yesterday, is up once again; interest rates, fairly flat to start out the week, are edging higher; and U.S. futures, after yesterday's large-cap rally, are moving modestly ahead in early pre-market trading.
— Harvey S. Katz, CFA
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
