After The Close
The stock market attempted to advance earlier this morning, abruptly sold off just before noon, but managed to partially recover later in the session. Earlier today, investors seemed increasingly worried that the coronavirus, which has been largely contained to China, may be spreading to other countries. In fact, according to media reports, two fatalities were announced in Japan today, along with a fatality in South Korea. In addition to concerns about general health issues, Wall Street may be getting worried that business, and corporate profits, could soon be at risk from the disease. It should be noted that a couple of days ago, Apple (AAPL – Free Apple Stock Report) announced that the situation has been disruptive, and it would be reasonable to assume that other companies may soon follow. At the close of trading today, the Dow Jones Industrial Average was down 128 points; the broader S&P 500 Index was off 13 points; and the NASDAQ was off 66 points.
Meanwhile, market breadth was mixed, as decliners were about even with advancers on the NYSE. The technology and healthcare names were areas of weakness today, while the financials and utility issues showed some relative strength.
Meanwhile, in economic news, there were quite a few positive reports released today, suggesting things are still going well on our shores. Specifically, initial jobless claims came in at 210,000 for the latest reported week. The Philadelphia Fed Survey registered a reading of 36.7 for the month of February, which was well ahead of expectations. Also, the Conference Board’s leading indicators report also showed upbeat results, gaining 0.8%, in January.
In corporate news, the fourth-quarter earnings season is not yet over, even though most of the big companies have weighed in. Today, shares of Domino’s Pizza (DPZ) surged in price, after the restaurant company put in an encouraging report. In contrast, shares of ViacomCBS (VIAC) dropped sharply to a 52-week low after that company delivered results that failed to impress investors. In the M&A space shares of E*Trade Financial Corp. (ETFC) surged on acquisition-related news.
Technically, the stock market has been holding up well, and today’s afternoon recovery was impressive. However, given the level of the market, and the potential problems brewing in China, some consolidation may be in order.
– 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
The stock market, which began the holiday-shortened trading week on a down note on Tuesday, quickly reversed course yesterday morning, rising from the start and fashioning a wire-to-wire win, which saw additional records set on the S&P 500 Index and the NASDAQ. All-time highs have become a regular occurrence for this latest push forward by the bulls, with investors buying stocks in abundance, as they seek to capitalize on mostly improving economic fundamentals and strengthening corporate profits.
Leading the way higher was the technology sector, with shares of Apple (AAPL – Free Apple Stock Report), a major contributor to the decline on Tuesday, turning notably higher in the latest session. Also surging once more were shares of self-driving car maker Tesla (TSLA), which soared back above $900. A raised target price by another brokerage house was a prime reason for the 7% jump in the stock during the session. On the other hand, new cases of the deadly coronavirus continue to mount, but at a lesser rate than heretofore.
Meanwhile, more than 2,000 have died from the disease as the number of cases has surmounted 74,000. As to other news on this second of four trading days this week, the Producer Price Index report for January was released and showed that prices rose by 0.5%, the largest one-month increase since late 2018. Also released were the minutes from the last FOMC meeting. In that issuance, the Fed suggested that it would likely hold interest rates at current levels for the time being.
Also of note, the U.S. Census Bureau reported that building permits came in at a seasonally adjusted annualized rate of 1,551,000 homes in January. That was well above the December pace and dramatically better than the January, 2019 rate. On the other hand, housing starts came in at 1,567,000 hones in January, 3.6% below the December 2019 level. Overall, housing, save for some occasional choppiness, remains in decent form, and continues to be a support for the long economic expansion.
As to the market, after a strong morning advance, the gains continued to come in the afternoon, with stocks ending matters comparatively near their best levels of the day, with the NASDAQ leading the push higher on that tech strength. In all, the Dow, boosted by Apple and some other key issues, rose by 116 points; the S&P 500 was higher by 16 points; and the NASDAQ, boosted by some big tech names, jumped 84 points. The small-cap names also did well, as the Russell 2000 rose strongly.
Now, a new day dawns and a look out at the futures suggests that the stock market will start the trading day with a modest setback.
– Harvey S. Katz
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
