After The Close
The stock market opened higher, pulled back momentarily, but then staged a massive and historic advance that lasted throughout the afternoon. At the close of trading, the major averages were all up dramatically, with the Dow Jones Industrial Average ahead 1,086 points, its biggest one-day point gain ever; the broader S&P 500 Index up 117 points; and the technology-heavy NASDAQ higher by 361 points. Market breadth showed widespread buying today, with winners outpacing losers by an overwhelming margin on the NYSE. All of the equity sectors participated in today’s move up, with sizable gains in the technology, retail, and energy issues. Of note, the price of crude oil jumped over 9% to over $46.0 a barrel in New York.
In economic news, there were no major reports released this morning. But tomorrow will be a much busier day. Specifically, we will get a look at the latest weekly initial jobless claims, the new home sales figures for November, and the Conference Board’s report on consumer confidence. In the corporate area, few companies delivered quarterly profit reports today. But it should be noted that many retailers indicated that holiday sales were quite strong, despite fears that the economy is slowing. It also should be mentioned that in the coming weeks, corporations will be delivering their fourth-quarter reports and providing fresh guidance for 2019. Traders will be closely watching those releases.
Technically, the stock market sold off dramatically before the Christmas holiday, and that move may have been too extreme. Today’s bounce was likely fueled by bargain hunters and value investors, looking to build long-term positions. Some of the turbulence we have been seeing lately reflects concerns about rising interest rates, trade disputes with China, and a general lack of stability in Washington.
- Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
2:20 PM EST
A deeply oversold stock market, increasingly ripe for a major rally has clearly gotten it today. On point, after rising strongly at the open and then giving back those gains in mid-morning trading, the equity market really has put on a show since we reached the noon hour in New York.
Specifically, after meandering about near the neutral line for much of the morning, stocks have surged anew, with the Dow Jones Industrial Average now up more than 600 points. Massive gains also are being seen in the S&P 500 and the NASDAQ.
This buying binge has helped to keep both the Dow and the S&P 500 out of bear market territory, which both had threatened to move into on Monday.
Surges in retail and energy shares have led the advance, with the NASDAQ now ahead the charge with a gain of 3.5% at this hour. The rise in energy prices came after crude oil had risen by some 7% following a steep multi-week decline in that key commodity.
In all, as we enter the final two hours of trading, the Dow is up 602 points; the S&P 500 is better by 67 points; and the NASDAQ is ahead by 230 points. No bears are now to be found on Wall Street--at least for part of one day.
- Harvey S. Katz, CFA
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell
Another day, another debacle for the stock market. Actually, it was really just half a day that produced the latest meltdown on Wall Street. To wit, after stocks tumbled throughout last week, with the NASDAQ falling into a bear market, that is declining by more than 20% from peak to trough, the stock market fell further during Monday's abbreviated session in increasingly nervous trading. In all, the latest trading day marked the worst setback ever for a Christmas Eve session. There were a number of reasons for this selloff.
To begin with, there are the underlying causes for the late-year tumble. These include worries about tariffs and trade, fears of a slowing global economy, concerns of decelerating growth in our country's economy, the possibility of eroding corporate profits, further investigations in Washington, and the partial government shutdown. Now, there is the resignation of the Defense Secretary late last week to consider, and even more recently, an unusual call from the Treasury Secretary to banking CEOs affirming that the financial status of the banks is still strong.
Finally, there was Monday's lashing out at the Federal Reserve Chair Jerome Powell by the President blaming him and the bank's decision to raise interest rates for the recent stock market reversal. Given all of this, there was little reason for stocks to do anything but fall further on Monday. And that is exactly what happened, with the selling commencing as trading opened. The Dow Jones Industrial Average, for example, fell by more than 400 points in the first half hour of the shortened session, attempted to recover later in the morning, only to fall further later on.
Meanwhile, the stock market's opening rout followed the meeting with the Treasury Secretary and the bank heads; the late drop, with the Dow falling to a closing low of 653 points, came in the wake of the renewed criticism of the Fed, with the implied threat that he might be considering firing Mr. Powell, an action that may not be possible. In any event, with the uncertainty being spread all around, there seemed to be little else for stocks to do but fall. And that is exactly what happened, with equities ending the day at session lows.
All told, the Dow, as noted, tumbled 653 points and is getting close to bear market territory, while the S&P 500 tumbled 66 points and is on the cusp of a bear market, being down just about 20% from its all-time high set on just October 3rd. The NASDAQ lost 140 points and is sitting below 6,200. At its best, the index was above 8,100. Looking at the rest of the market, decliners overwhelmed gaining issues on the NYSE. It was just the latest rout in an agonizingly long line of routs in the stock market in recent weeks.
Now, after what we hope was a joyous and safe Christmas break for our loyal readers, we look out on a new day of trading to see that stocks were generally lower in Asia overnight, while in Europe, the leading bourses are pressing downward, as well at this hour. Elsewhere, Treasury note yields are edging up after an earlier fall and oil prices, in their own bear market, are edging higher for now. Finally, U.S. equity futures are pointing to a higher opening when trading resumes momentarily in what again promises to be a volatile session.
- Harvey S. Katz, CFA
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
