After The Close
Equities got off to a weak start this morning, but managed to selectively recover ground, as the session unfolded. Some of the choppiness in the market today, was due to renewed concerns that a trade deal between the U.S and China may be delayed. Also on the international scene, mounting military tensions between Pakistan and India likely did little to calm the financial markets. At the close of trading, the Dow Jones Industrial Average was down 73 points; the S&P 500 Index was off two points; but the NASDAQ was ahead nominally. Market breadth showed a divided session, with advancers about even with decliners on the NYSE. From a sector perspective, the industrial and basic materials issues displayed some relative strength, while healthcare and consumer names lost some ground.
In economic news, factory orders rose 0.1% in the month of December, where a somewhat better performance had been expected. On a brighter note, pending home sales improved 4.6% in January, which was an encouraging figure. Tomorrow, we will get a look at the latest weekly initial jobless claims, as well as the advanced estimate for fourth-quarter GDP.
In the corporate arena, traders continued to sift through some releases. However, fourth- quarter earnings season is nearly over. We recently heard from Weight Watchers (WTW). That stocks plunged in price, as investors were not pleased with the company’s outlook. Things went a bit better for Best Buy (BBY). That issue was up nicely in response to an upbeat report.
Technically, the stock market has done quite well so far this year. A better-than-anticipated fourth-quarter earnings season likely provided the fuel needed to lift the market. Looking ahead, investors will be watching the negotiations with China, the meetings taking place with North Korea, not to mention, the constantly shifting political environment here at home.
– 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
Then, yesterday, the market started out with a brief, but sharp, retreat. Once more there was a triple-digit move in the aforementioned Dow, only this time it was a decline of that magnitude. Some logical concern ahead of what is hoped will be a definitive accord between the two nations on trade was one of the factors in the initial setback. Also, an hour before the market opened, the investing community received some dour data on the economy. In this case, it had to do with the housing sector, more specifically, housing starts
On point, the report issued showed that housing starts in December (the data on this issuance had been delayed by the earlier partial government shutdown) came in at an annualized rate of 1,078,000 homes. That was 11.2% below the revised November tally, and 10.9% below the December, 2017 level. Mitigating this weaker showing was a solid report on building permits, a more forward-looking metrics. This data points was up nominally on a monthly basis and annual basis. Still, the report was not received charitably and stocks sold off.
On the other hand, 30 minutes into the session, the Street received some reassuring news when the Conference Board reported that its survey on consumer confidence increased to a reading of 131.4 in February. That was better than the January tally and above expectations. A stronger stock market and the end of the government shutdown no doubt had favorable effects on such sentiment. The release of this survey, not surprisingly, sent the sellers racing for cover and the indexes all rallied for a time.
Meanwhile, the also were earnings Here, home improvement retailing behemoth The Home Depot (HD – Free Home Depot Stock Report) announced GAAP earnings of $2.09 a share for the latest quarter. Expectations had been for somewhat higher net. However, adjusted earnings came to $2.25 a share. That was above expectations. Nevertheless, guidance was relatively cautious and the stock weakened, holding down the Dow for much of the day. Still, stocks did rally into the plus column for much of the day before weakening ever so slightly into the close.
All told, the Dow, up for much of the afternoon, after righting itself following the confidence report, closed off 34 points. Nominal deficits were tallied by the S&P 500 Index and the NASDAQ. The advance-decline differential was minimal. Taken as a whole, the market showed little overall direction and as we head out into the middle trading day of the week, there is not much of a pattern evolving in the current week. Should a trade deal surface or some breakdown in the talks develop, the current sense of calm likely would dissipate.
Looking out to a new day now, we see that stocks in Asia were mixed in overnight dealings. In Europe, meantime, the leading bourses are trending lower at this hour. In other action, Treasury note yields are inching downward and oil prices are gaining on planned OPEC output reductions. Finally, the U.S. equity futures are now pointing to a weaker opening when trading resumes this morning.
