After the Close
The major U.S. indexes climbed to record highs on Tuesday, the first day of the holiday-shortened trading week. A mostly positive earnings season and improving economic data have buoyed this latest chapter of the Trump rally, which assumes the President’s business-friendly initiatives will lead to greater prosperity in the corporate world. The S&P 500, Dow Jones Industrial Average, and NASDAQ each set new high water marks a little over an hour into trading, and while the gains were slightly reduced around lunchtime in New York, all three regained some momentum as the closing bell neared.
Meanwhile, oil prices ticked higher after OPEC Secretary General Mohammad Barkindo touted the more-than 90% compliance rate for the cartel’s six-month production cut. After navigating through some uncertainty early in the year, recent reports about the accord and its participants have been mostly on the positive side. Mr. Barkindo foresees a yearlong oil inventory decline and expects the adherence level to be sustained. U.S. crude finished the day at $54.06 per barrel, up 1.2% from the previous session’s close.
Today’s bullish market was propped up by buying activity of mid- and small-cap issues, though the blue chips also fared well. Accordingly, advancing stocks outnumbered decliners 2.2-to-1 at day’s end. All but one of the ten major market sectors finished higher, with non-cyclical consumer goods shedding slightly. As was the case during the morning hours, basic materials and energy stocks led the rally. The utilities sector also strengthened in the afternoon.
Then, a late-in-the-day spurt drove the averages back near their morning highs. In all, the S&P and Dow were the best aggregate performers, adding 14 and 119 points, respectively. The tech-heavy NASDAQ registered a solid 27 point advance. Looking forward, the business beat will pick up over the course of the week, beginning with tomorrow morning’s existing home sales release. The following two days will see weekly jobless claims, new home sales figures, and an updated reading on consumer sentiment. Stay tuned. – Robert Harrington
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Mid-Day Update - 11:55 AM EST
Wall Street began the post-President's Day weekend session solidly to the upside, as a carryover from last week's continuing rally, including record high closes for the Dow Jones Industrial Average and most of the other large-cap indexes. As to the session this morning, solid earnings releases on the retail side, and higher oil prices got the day off to a good start. Even before the market opened, the U.S. equity futures had hit new record highs. This pre-market uptick, which also was helped by constructive sessions in Asia overnight and in Europe this morning, lifted the Dow by more than 100 points within the first 45 minutes, or so.
The strong start then continued throughout the middle part of the morning, boosted, as noted, by generally upbeat earnings and the naming of a new head of national security by President Trump. That choice elicited generally high praise. The market was led by the energy and basic materials issues, on the aforementioned rise in oil prices. In fact, each of the 10 major equity sectors was in the plus column at this point, while gaining stocks held better than a five-to-two lead on declining issues. The other eight equity groups were higher, as well, on this bullish day.
As to earnings, the market has had to evaluate a number of earnings reports from large U.S. retailers, including Macy's (M), The Home Depot (HD - Free Home Depot Stock Report), and Wal-Mart (WMT - Free Wal-Mart Stock Report). Regarding big box retailer Macy's, it posted mixed results, beating on the bottom line, but falling short on the revenue side, a rather common occurrence this reporting season, where two-thirds of the companies domiciled in the S&P 500 Index have beaten their consensus earnings expectations. Macy's shares were up modestly in early trading. The Home Depot also was gaining favor after issuing its quarterly metrics, while Wal-Mart stock continued to be the biggest gainer on the Dow, rising nearly 4%.
In addition to generally supportive earnings, the stock market also has been helped by a strengthening economy. On point, most issuances have been constructive, particularly with respect to housing, consumer spending, and now capital investment. Meanwhile, the market continued to rally into the latter part of the morning, with the Dow's gain moving north of 130 points, crossing the 20,750 threshold as the morning wound down. Gains also were notable on the S&P 500 index (ahead by better than 15 points at that stage), and on the NASDAQ (up by close to 30 points after the first 90 minutes). However, that would prove the morning's high point.
As we headed toward the noon hour in New York on this otherwise light news day, we see that the Dow is now up just 65 points; the S&P 500 Index is ahead eight points; and the NASDAQ in in the black to the tune of 13 points. Solid gains also are being booked by the S&P Mid-Cap 400 and the small-cap Russell 2000. Regarding the schedule of economic releases, we will be getting data on sales of existing homes tomorrow morning. Then, on Thursday, we will be getting the weekly report on jobless claims, while the week will conclude with Friday's issuances on new home sales and consumer sentiment. – 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
Following strong performances for Wall Street during the first three trading days of last week, and an ordinary showing this past Thursday, investors began the final session of the week, and the one before the long holiday weekend, moderately to the downside, with the Dow Jones Industrial Average pulling back below 20,600. At the morning's nadir, that composite was off nearly 80 points. The early selling also took in the S&P 500 Index, the NASDAQ, and the small- and mid-cap composites. However, the bears could not muster much in the way of momentum, so within the first hour, some buyers surfaced.
One early factor in the weaker trading by an overbought equity market was an uneasy feeling about France's Presidential election. In that pending contest, recent polls suggest that Marine Le Pen, France's far right candidate, is the favorite to win the first round of voting, scheduled for April. However, it is uncertain whether she can win a likely runoff in May. Concerns about this election took the measure of the Paris CAC-40 earlier in the day. Meanwhile, the Socialist and the far left candidate for President of France have held talks about possibly joining forces to hold off Ms. Le Pan.
So, against this uncertain European backdrop, the market encountered the initial selling. Meanwhile, after this early downtick, stocks held above its early lows as the morning progressed. Solid economic fundamentals on the housing and industrial fronts continue to support prices as do hopes that President Trump's well-advertised tax promises will be fulfilled. Mr. Trump is due to make public his tax plan in the next week or two. Meanwhile, after that early attempt to pare their losses, the key indexes wilted somewhat as we approached the noon hour in New York, leaving the first half of the trading day moderately in the red.
Then, as the afternoon got under way, stocks continued to languish, with the Dow, the S&P 400 and 500, and the Russell 2000 all holding modestly in the red, while the NASDAQ, on minor strength in technology, was pushing ahead after a faltering start. This uneven performance then continued into the latter stages of the afternoon. Meanwhile, on the news front, the lone issuance of note was the release of the Conference Board's Leading Indicators, which showed an increase of 0.6% in January, following a gain of 0.5% in December. This latest sharp increase points to a positive economic outlook in the first half of this year.
The market then firmed up a little bit more as the final minutes ticked down, with the S&P 400 and 500, and then at the closing bell, the Dow and the Russell 2000 all going positive, if narrowly so. As to a breakdown on this strongly bullish week, there still were more declining than gaining stocks on the Big Board, where an even breakdown was seen among the 10 leading sectors. However, notable strength was seen in the consumer noncyclical group on takeover talk in that large sector involving a bid for Unilever (UL). Several companies in that broad space saw favorable price action on that news.
Now, following the long President's weekend, we are back to the trading arena, where we have seen the major countries in Asia posting generally positive results overnight, while in Europe, the Continent's bourses are now trending slightly higher at this hour. Oil, too, is rising, as, currently, are U.S. equity futures, presaging a nicely higher market opening this morning. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
