After The Close
The stock market opened higher this morning, but spent the rest of the session trading in a choppy fashion. Some of the strength during the day was likely due to optimism that a deal between the United States and China might soon be reached, and that another round of tariffs could be averted. At the end of the session, the Dow Jones Industrial Average was ahead 118 points; the S&P 500 Index was up eight points; and the NASDAQ was higher by six points. Market breadth was favorable, as winners outpaced losers by a comfortable margin on the NYSE. From a sector perspective, some consumer and basic materials issues moved higher, offsetting weakness in the utility stocks.
In economic news, the Consumer Price Index (CPI) was unchanged during the month of January. The core rate, which excludes food and energy, edged up slightly. In general, the report was quite tame, suggesting that inflation is not yet cause for concern. Tomorrow, we will get a look at the monthly producer prices. In addition, the latest weekly initial jobless claims will be reported.
Meanwhile, the fourth-quarter earnings season is still in progress. Over the past 24 hours, a few widely followed companies reported their results. Specifically, shares of Activision Blizzard (ATVI) traded higher today, after the maker of video games put out disappointing results, but announced some restructuring efforts. In addition, shares of TripAdvisor (TRIP) moved lower in response to a lackluster report and weak outlook. And after the closing bell, we heard from Dow-30 component Cisco Systems (CSCO – Free Cisco Stock Report).
Technically, the stock market has been marching higher as we move further into 2019. It remains to be seen if the bulls can keep their buying campaign in place in the coming weeks.
- 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
Optimism on the vexing budget front, where negotiators for both political parties believe that they had been able to fashion a tentative and credible accord, sent stocks rising overseas before our markets opened yesterday, and then lifted U.S. equities strongly after the opening bell on our shores. In all, the Dow Jones Industrial Average quickly jumped out to a gain north of 200 points. Strong advances also were tallied by the S&P 500 and the NASDAQ, on these optimistic goings on in Washington.
The market would then strengthen further as the morning continued, with the Dow climbing to an increase north of 300 points, as the Street waited anxiously for the President to weigh in on the proposed budget accord. His initial take was clearly lukewarm, although he did not indicate a complete aversion to the deal in principle. That indecision was, nevertheless, taken well by traders who continued to pour money into the market, enabling the key indexes to remain near session highs as the afternoon began.
Meanwhile, optimism that some progress may soon be forthcoming on the trade front with China emboldened traders still further as the afternoon moved along, sending the averages still higher in mid-afternoon. All told, the Dow jumped to a gain just north of v400 points as we reached the final two hours of the session. The advance in the NASDAQ hit 100 points. As for the improved prospects for a trade deal, investors were focused on U.S. - China trade talks as both countries tried to hammer out a deal before a nearly March deadline.
As for trade, both sides were expressing some optimism that an accord can be hammered out that would have some lasting appeal. It is possible, even likely, that the early March deadline will be pushed back somewhat in order to keep the talks going. The market, sensing that there was hope afoot, continued to advance, with the Dow's rise continuing to be in the 400-point range as the afternoon wound down. All of the indexes rose and gaining stocks were well into the lead on the day.
Little then would change down the home stretch, with optimism on a budget deal, which most expect the President to go along with in spite of his chilliness towards it, and hopes on trade keeping the sellers at bay. So, the rally remained intact, with the Dow rending matters ahead by 372 points. Stocks with any international exposure did especially well, but a number of domestic plays gained nicely, too. Also, advancing issues held a formidable lead on declining stocks at the end of the session, while oil prices rose on new output curbs.
Looking out on a new day now, we see that shares were higher in Asia overnight on optimism about U.S.- China trade talks, while in Europe, the leading bourses are gaining, as well. Also of note, oil prices are edging upward once more; Treasury note yields, up yesterday, are rather flat; and U.S. equity futures are suggesting a higher opening when trading resumes.
– Harvey S. Katz, CFA
