After The Close
The stock market opened sharply higher this morning, but pulled back in the late afternoon. The initial advance was likely fueled by hopes that a trade deal with China may soon be reached. News that additional tariffs on goods from China will be postponed was also seen as a positive development. At the close of trading, the Dow Jones Industrial Average was ahead 60 points; the S&P 500 Index was up three points; and the NASDAQ was higher by nearly 27 points. In general, there was a positive tone to today’s session, as winners outnumbered losers on the NYSE. From a sector perspective, the technology and financial issues forged ahead, while the consumer and utility shares lagged.
Meanwhile, it was a light day for economic reports. However, wholesale inventories increased 1.1% during the month of December, surpassing analyst expectations. Tomorrow, the pace will pick up somewhat. Specifically, the latest monthly housing starts will be released, along with a consumer confidence report.
In corporate news, it was a quiet day for corporate profit reports. However, there were some business developments worth mentioning. Shares of General Electric (GE) moved higher on news that the industrial giant is selling assets in an effort to turn things around.
Technically, the stock market has logged a sizable advance since the start of 2019. It remains to be seen if the bulls can keep the rally going from current levels.
- Adam Rosner
At the time of this article’s writing, the author had a position in General Electric (GE).
Before The Bell
The most recent abbreviated week of trading (the U.S. stock market was closed last Monday for Presidents Day) was another good showing for the bulls. It marked the ninth-consecutive winning week for the Dow Jones Industrial Average, a feat not seen in 24 years. The index of 30 bellwether companies has not been going at it alone, though, as the NASDAQ is in the midst of a long winning streak and the broader S&P 500 Index has finished higher in eight of the last nine trading weeks. The recent surge of buying on Wall Street has retraced the losses suffered in the final quarter of 2018, which included the worst December showing since 1931. The primary catalysts behind the stock market climb have been a supportive fourth-quarter earnings season, continued strong labor market data, and a slightly more-dovish-than-expected Federal Reserve. The central bank’s recently modified stance on monetary policy, in which it plans to be more data driven and not as aggressive with regard to interest-rate hikes, has given a big boost to equities.
On Friday, the aforementioned major equity averages continued their push higher. The Dow 30, NASDAQ Composite, and the S&P 500 Index advanced 182, 68, and 18 points, respectively, with the blue-chip index finishing last week above the 26,000 mark. The buying was broad based, with the small- and mid-cap sectors also higher; the small-cap Russell 2000 posted the biggest percentage gain on the final day of trading last week. For the session, advancing issues led decliners by a wide margin, to the tune of three to one on the New York Stock Exchange. Pushing the market higher were reports that the United States and China are making significant progress on their trade talks. President Trump and his top economic advisers met with officials from China on Friday, and there is growing sentiment that the President may soon meet with China’s President Xi, in what some pundits feel may be the final step in hammering out a trade deal between the world’s two-largest economies. Another sign that an accord may be close came yesterday when news surfaced that President Trump will delay an increase in U.S. tariffs on Chinese goods scheduled for later this week, owing to progress in trade talks. On March 1st, the President had planned to increase tariffs to 25% from 10% on $200 billion worth of Chinese imports into the United States.
The trade discussions will lead what will be a very busy week of news for Wall Street. Traders also are expected to keep close tabs on the planned summit between the United States and North Korea and the latest commentary from Federal Reserve Chairman Jerome Powell, who will give prepared commentary before Congress on Thursday and Friday. As noted, the Federal Reserve’s decision to be more cautious with regard to interest-rate increases has proven supportive for stocks. The investment community also will be looking at the last round of fourth-quarter earnings releases this week, which will come from the retailers, including industry giant Home Depot (HD – Free Home Depot Stock Report) tomorrow morning. Investors may be more interested to hear what the retailers have to say about the coming months than what the fourth quarter produced, as recent monthly retail sales data have been very disappointing. Speaking of economic data, it will be a heavy week of news from the business beat, with reports due on housing starts, new home sales, durable goods orders, personal income and spending, and manufacturing activity. And, we will finally get a reading on fourth-quarter GDP, which was delayed a month due to the recent government shutdown. The first and second estimates on GDP for the final quarter of 2018 will be released on Thursday morning at 8:30 A.M. EST.
With less than an hour to go before the commencement of the new trading week stateside, the equity futures are indicating that the buying will continue when the U.S. stock market opens. The performance overseas also has been good today, as the main indexes in Asia finished higher overnight and the major European bourses are in positive territory as trading moves into the second half of the session on the Continent. The primary catalyst is the aforementioned sentiment that the United States appear to be inching closer to a trade deal. Perhaps, a possible trade deal will be the impetus to push the S&P 500 past the fast-approaching 2,800 mark, a level that has provided much resistance for stocks in recent memory. We shall see.
– William G. Ferguson
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
