Before The Bell
After up-and-down sessions the first two holiday shortened sessions this week, Wall Street seems poised to commence trading on a positive note this morning, with stocks likely pushed higher by optimism that the way could be paved for additional easy monetary policies from the Federal Reserve in the year upcoming even if the economy gets the boost widely expected from the mass distribution of COVID-19 vaccines.
Wall Street, which had begun the final and holiday shortened week on a positive note on Monday, commenced the session yesterday in similarly upbeat fashion, emboldened, apparently, by the President's finally agreeing to sign a $900 billion fiscal stimulus package after days of uncertainty on that count. One piece of the financial puzzle remained, and that was whether a stand-alone $2,000 payment to qualified individuals would pass Congress. It did so in the House, but its fate was uncertain in the Senate at press time.
Meanwhile, after that fast start, which would see the Dow Jones Industrial Average jump out to an early gain of 185 points, pushing that 30-stock composite to yet another all-time high, the equity market began a session-long retracement, which would lead to a final loss of 68 points in the blue chips. The S&P 500 would trace a similar day-long pattern, finally ending off eight points, while the NASDAQ would edge downward by nearly 50 points. In all, each composite would hit another record, while the Dow and the S&P would snap a three-day winning streak.
In addition to the lingering issue of the stimulus package, the stock market was set back modestly by weakness in some high-profile Dow stocks, notably Apple (APPL) and The Home Depot (HD). However, another blue chip, and one that has struggled this year, Intel (INTC), offset some of the aforementioned weakness, after a major holder of the issue urged the company to explore other options. Overall, though, this has been a stellar year for the market thanks to the vaccine rollouts, fiscal stimulus, and easy money policy on the part of the Federal Reserve.
Looking out to a new day now, there will likely be more drama surrounding the stand-alone $2,000 payments, as the Senate debates the issue further. Also, on the economic front, we will get data on pending home sales and a look at manufacturing activity in the Midwest, as the Chicago area purchasing managers will issue their survey for the past month. Finally, in a key report released yesterday, the Conference Board noted that Consumer Confidence had declined in December, easing from 92.9 to 88.6. That may also have been a factor in the market's retracement yesterday.
Finally, in a brief look ahead, tomorrow morning will see the release of weekly jobless claims data at 8:30 (EST). Last week, claims fell unexpectedly, but the overall trend has been higher, unfortunately.
– Harvey S. Katz, CFA
At the time of this article's writing, the author had positions in AAPL and INTC.
