After the Close
The U.S. stock market opened nicely higher this morning, but notably trimmed its gains in the afternoon. Nonetheless, at the close of the session, the major averages managed to stay in positive territory, which was encouraging. Specifically, the Dow Jones Industrial Average was ahead 11 points; the broader S&P 500 Index was up five points, and the NASDAQ was higher by nearly 25 points. Market breadth was favorable, with advancers ahead of decliners on the NYSE. Most of the major market sectors participated in today’s advance, with respectable gains in the technology and basic materials issues. Meanwhile, the healthcare and utility stocks lagged to some extent.
Meanwhile, traders received a few economic reports today. Specifically, the Conference Board’s Consumer Confidence Index registered a reading of 113.7 for the month of December, coming in ahead of expectations. Of note, this showing was quite strong, and shows much improvement compared to the year-ago levels. Elsewhere, according to The Case-Shiller 20-City Index, housing prices continue to edge up, helped by a decent showing in the month of October. Tomorrow the housing market will be in the spotlight again, as we get a look at pending home sales for the month of November.
Finally, it was a light day for corporate profit reports. However, as the year comes to a close, we can expect some companies will issue revised guidance before the fourth-quarter earnings season starts up in a few weeks.
Technically, equities continue the rally that started in early November. Although, it should be noted that stocks have been making more measured gains over the past couple of weeks. With 2017 approaching, some traders may be making portfolio decisions. Some may choose to hold their winners for a while longer to defer taxes. Others may be selling losing positions to offset gains, or receive a tax credit. Further, some professional money managers may engage in “window dressing” by buying and selling select stocks in order to appear better positioned when they report to investors. – 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 - 11:35 AM EDT
Wall Street opened for trading earlier today following the long Christmas weekend, and began the session nicely to the upside, boosted by strength in oil, the dollar, gold, and stocks in Europe. Equities, meanwhile, began the week generally lower in Asia, while Treasury yields were up modestly to start the day, with the return on the 10-year Treasury note rising to 2.57%.
Stocks also were boosted by a 5.6% increase in home prices in October. Meanwhile, at 10:00 (EDT) this morning, the Commerce Department, a private research organization, reported that its Consumer Confidence Index had surged to a better-than-expected reading of 113.7 in December. That was well ahead of an upwardly revised November tally of 109.4. Initially, the November survey result had come in at 107.1. Strength in the U.S. stock market would seem to get some of the credit for the increase in the public's optimism.
All told, the confidence reading, which had been expected to come in at 109.0, reached its highest point in more than 15 years. Moreover, the Richmond Federal Reserve reported that its regional manufacturing survey had jumped in the latest month. So, armed with this broad strength in the economy and with generally optimistic leanings globally, stocks have spent the morning rallying strongly, with the Dow seemingly ready to make yet one more attempt to scale the lofty 20,000 level, a target that has withstood its efforts over the past week.
Breaking the day's action down so far, the strength is concentrated on the NASDAQ, where strong rallies in some technology stalwarts and biotech companies has propelled that Index above 5,500 for the first time ever. The Dow, meantime, has strengthened more modestly, gaining sufficient ground to bring that composite up to some 20 points shy of the 20,000 mark.
As to the various sectors, we see that eight of the 10 principal equity groups are now higher, led by technology, energy, health care, and basic materials. Only telecom and the utility group, both sporting high dividend yields, are working lower at this hour, and their retreats are modest. Also, gaining stocks hold a comfortable lead of some five to two over declining issues currently. Thus, this could well be the day that the Dow crosses the 20,000 threshold.
Looking out at the broad market as we head toward the noon hour, we see that the Dow is now ahead by 33 points, bringing that composite to within 35 points of 20,000. The S&P 500 Index is ahead eight points, and is also closing in on a record high, while the NASDAQ is now ahead 37 points and skirting 5,500. That level had, as noted, been surmounted earlier in the session. The advance also is taking in the small-cap issues, as the Russell 2000 is now up about six points.
So, we could well be setting up for an exciting close with the Dow possible moving above the 20,000 mark, a level that we are closer to than at anytime last week. – 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
After trying throughout the first part of the past week to crack 20,000 on the Dow Jones Industrial Average and having no success in that endeavor, the bulls gave in on Friday and for a second day in succession stayed range bound, within some 50 points on that index, as fatigue after a long run appeared to set in. Encouragingly, though, after spending much of this pre-Christmas session in the red, if just grudgingly so, the bulls undertook a modicum of buying in the final few minutes to lift the averages narrowly into the plus column.
In all, the Dow Jones Industrial Average recorded a modest 15-point gain, but it still was the seventh week in a row in which this composite had risen. Also gaining on this low-volume day and week before the long holiday weekend were the S&P 500 Index (up three points), the NASDAQ (ahead 15 points), and the small-cap Russell 2000 (better by nine points. All in all, it was a rather understated, but still modestly constructive, way to end this penultimate week of 2016.
What was true of the New York scene, also was so globally, where there was little change in the dollar, oil, and the major bourses in Asia and Europe. It is as though the financial world is waiting for the old year to end and is just crawling to the finish line. The market seems to still like the outlook for the economy and the impact that the incoming Administration could have on the nation's business affairs. Meanwhile, with this latest gain, the Dow is up more than 14% for the year.
Of course, the challenge to surmount 20,000 on the Dow remains in front of the bulls, and while the odds would still seem to favor such a conquest, as the Index is now just 67 points shy of that level, there is no assurance it will happen, especially in the near term. As to individual issues, long-troubled Weight Watchers International (WTW) rose almost 9%, gaining strongly for a second day in succession, after TV celebrity and major WTW holder Oprah Winfrey said in an ad that she had lost 40 pounds on the program.
Meantime, as we look out to a new day and week and to what may yet be another test of Dow 20,000, we see that stocks in Asia were mostly lower in overnight dealings, while in Europe so far this morning, the principal bourses are working their way grudgingly higher. Looking to our shores, we see that the early read on the futures is now slightly higher, as well. As to the week ahead, we would expect trading volumes to be light once again as a holiday atmosphere will once more likely prevail.
Finally, in pending news this week, we are scheduled to get data on consumer confidence shortly after trading commences in less than an hour from now. Expectations are that this closely tracked metric will show an increase for December, based in no small part, we believe in the length, the magnitude, and the durability of the latest bull market surge. Other than this pending report, we would expect the market to stay range bound for the most part in this last week of the year. – Harvey S. Katz
At the time of this article's writing, the author had positions in WTW.
