After The Close
The stock market opened higher today, and managed to build on these gains through the afternoon. Today, traders seemed pleased with recent reports suggesting that the U.S. and China were close to reaching a trade agreement. Furthermore, reports showed that retail sales strengthened during the holiday season, with notable gains in the online shopping area. At the end of the session, the Dow Jones Industrial Average was ahead about 106 points, the broader S&P 500 Index was up 17 points, and the NASDAQ was higher by 70 points.
Market breadth was favorable, with advancers just ahead of decliners on the NYSE. The services, technology, and basic materials sectors made notable progress, while the utilities and healthcare stocks lagged.
Meanwhile, it was a quiet day for economic news. However, there was one item released today worth mentioning. Specifically, initial jobless claims came in at 222,000 for the week of December 21st, which was in line with expectations. The economy and the employment situation still seem to be in good shape, which is encouraging. We will get more information on this front, when the government issues its monthly employment numbers in the coming days.
In corporate news, few companies posted quarterly reports today, as this is generally a quiet time of year. As 2019 will soon be over, companies will be releasing their fourth-quarter and full year numbers, and more importantly, providing fresh guidance for 2020.
Technically, the stock market seems positioned to wrap up 2019 on a high note. Many of the averages are sitting at record high ground. In fact, today the NASDAQ crossed the widely-watched 9,000 mark. Hopefully for the bulls, 2020 will be another year of sizable gains.
– 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 will shortly open for business, following the break yesterday to celebrate the Christmas Day holiday--which we hope was a joyful one for our readers--in hopes of extending what has been a strong late-year up cycle for the equity market. To be sure, the latest session was a rather unprepossessing affair, with a mixed performance throughout the abbreviated trading hours. (The stock market closed at 1:00 PM on Tuesday) Overall, it was a hoi-hum day for traders with light trading volume and a general paucity of news on the business or global fronts.
As to the Tuesday session, it began on a muted note, with the Dow Jones Industrial Average quickly shedding a modest gain to fall slightly into the red. That is where it would remain into the close. A similarly undistinguished pattern was traversed by the more broadly configured S&P 500 Index. Whatever strength was exhibited was seen in the NASDAQ. However, here, as well, there was little improvement of note, with that composite only edging into the green by seven points at the close. But this underwhelming outcome remained in sharp contrast to the eye-catching gains on the year to date.
Regarding those increases, the Dow is up by better than 22%; the S&P 500 is more than 28% higher; and the NASDAQ is in the win column by nearly 35%. Stocks have been buoyed throughout by a succession of high-profile tech names, such as Apple Inc. (AAPL – Free Apple Stock Report) and Microsoft (MSFT – Free Microsoft Stock Report), two issues that also have lent a helping hand to the Dow and the S&P 500. This strength, in the meantime, has pushed the market to rarified heights and stretched valuations. Still, with the Federal Reserve keeping interest rates low and an apparent trade truce with China in place, stocks probably are not materially overvalued at this point.
Meanwhile, as the year winds down, we see a stock market that has completely turned the tables on 2018, when the averages were all lower, with material setbacks recorded in the fourth quarter and during December. This year, by comparison, the gains were modest into the second half when the aging bulls got a second wind and drove stocks dramatically high down the homestretch. But the year has not only included big increases in the large-cap sector, but also among the smaller composites, such as the Russell 2000, which has fashioned a 24% increase.
Looking ahead to the balance of the year, we see the economy picking up a modicum of momentum, with recent upticks in housing starts, building permits, industrial production, factory usage, and employment all contributing to a likely near 2% increase in GDP in the now-ending fourth quarter. To be sure, there could well be a little backtracking in the first quarter, in large part because of the grounding of the 737 MAX production by ailing aerospace giant Boeing (BA –Free Boeing Stock Report). That suspension in output could well clip GDP by as much as half a percentage point, keeping growth at perhaps 1.5% in the opening stanza.
As to the upcoming session, the stock market is poised to open matters to the higher when trading resumes in our country following a higher close in Asia. As was the case von Tuesday, we would expect trading volume to be subdued, with so many on vacation this week and the news flow modest, in general.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
