After The Close
The major U.S. stock indexes started the Friday before the long President’s Day weekend somewhat undecidedly, but the bulls soon took over the reins. For a while, it looked like equities would easily chalk up a sixth straight win, but things got shaky after it was reported that 13 Russians were indicted for interfering with the 2016 U.S. elections.
Otherwise, the news was light on the economic front today. The University of Michigan’s consumer sentiment index for February came in better than expected this morning, rising to 99.9 versus a reading of 95.7 in January. It also marked the second-highest level since 2004. Most of the increase was attributed to the strong labor market and recent tax reductions.
All three of the major U.S. indexes fell into the red shortly after 2:00 PM Eastern Time, but a late-session rally lifted most stocks back into positive territory. At the closing bell, the Dow Jones Industrial Average held on for a 19-point gain and the broader S&P 500 was up by one. However, the NASDAQ ended down 17 points. Among the 10 major market sectors, gainers edged out decliners by a wide margin, led by healthcare and utilities, each rising about 0.9%, while consumer noncyclicals were up 0.6%. At the other end of the spectrum, basic materials and energy issues were modestly in the red. Overall, trading was somewhat muted due to the approaching holiday. Elsewhere, light sweet crude was up about half a percentage point, to $61.65 a barrel, despite a small increase in the U.S. rig count.
Trading was more upbeat on the European bourses today, with stocks spending the entire session in the green. France’s CAC-40 led the pack with a gain of 1.1%, while Germany’s DAX and Britain’s FTSE 100 weren’t far behind, each gaining about 0.8%.
— Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell
In sports, it might have been termed the drive for five, as Wall Street, in possession of four consecutive winning sessions, sprinted out to an attempted fifth straight higher close yesterday morning. In all, following the release of an in-line Producer Price Index for January, one day after the companion Consumer Price Index had jumped by more than forecast, the stock market was off and running, with the Dow Jones Industrial Average rising by about 225 points early on. That strong gain lifted the 30-stock composite back above 25,000. At its correction trough late last week, the index had fallen several hundred points below 24,000.
Leading the initial charge were the financial stocks, with investment banking giant and Dow component Goldman Sachs (GS - Free Goldman Sachs Stock Report) up strongly in early dealings. Nice gains also were tallied by the S&P 500 Index and the NASDAQ, where the technology groups again did well. Speaking of technology, shares of Apple (AAPL - Free Apple Stock Report) pushed higher as well, rising more than $3.00 in the morning trade. This strong start evolved even as Treasury yields climbed initially, before backing off somewhat after the first buying flurry. However, the market's initially formidable gains moderated as the morning progressed, as worries about inflation resurfaced.
In all, as we reached the 90-minute mark of the session, the S&P 500 Index and the S&P Mid-Cap 400 had fallen into the red, while the Dow would soon follow. But this sojourn into minus territory would be short-lived, with the major indexes all climbing back into the black as the morning concluded. In fact, the follow-up recovery was quite strong. This then would continue past the noon hour in New York and intensify, with the Dow and the NASDAQ steadily moving up to session highs by mid-afternoon. Following the sharp selloff last week, it seems as though confidence in the market is gradually returning.
Meantime, the afternoon advance again was led by Apple, as that stock, up $3 earlier in the day, doubled that gain, while Goldman Sachs continued to press higher, as well. However, the volatility was still concerning, with the S&P 500, which had been stable for the most part in 2017, making no less than seven moves of more than one percent in the last two weeks, or so. In fact, despite the nifty rebound in the afternoon, worries about inflation and interest rates were still on the front burner. As to news influencing the day's action, a pre-market report showed that producer prices had risen by 0.4% in January. That was the increase expected.
Readers will recall that an increase above expectations by the Consumer Price Index issued on Wednesday had led to some early selling in the stock and bond markets. The latest release, while certainly not overly reassuring, as the aggregate increase was still quite large, was less unnerving, and bond yields actually fell as the day progressed after an initial bump higher to yet one additional four-year high. Also of note, the Commerce Department released the latest industrial production figures and these indicated a slight dip in output during January. An increase had been the forecast.
Meanwhile, stocks continued to strengthen as the session moved toward the close. In fact, the indexes all closed at session highs, with the Dow ahead 307 points, the NASDAQ better by 113 points, and the S&P 500 Index in the black to the tune of 33 points. Thus, the so-called drive for five was secured by the bulls, meaning that about half of the correction suffered last week has been made up. As to interest rates, they closed a tad off of session highs, with the yield on the 10-year Treasury note ending matters at 2.89%, earlier, those notes had passed hands at 2.93%.
Looking out to the final day of the week, we see that markets in Asia were higher, while in Europe, the Continent's principal bourses are tracking upward, as well, at this hour. Elsewhere, oil prices are up slightly and Treasury note yields are holding fairly steady. Finally, U.S. futures are signaling a higher opening when trading resumes this morning.
— Harvey S. Katz, CFA
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
