After the Close
Most U.S. stocks opened Tuesday morning higher, before the bullish grip was loosened by some negative pressures. The partial reversal was especially apparent in the broad-based S&P 500 Index, which went from rising to within a few points of its all-time high early in the session, to spending the afternoon around the breakeven line. The Dow Jones Industrial Average and NASDAQ, meanwhile, both managed to set new peak intraday trading highs, but shed most of the gains by day’s end. Small- and mid-cap stocks were especially challenged in the second half of the session, and the Russell 2000 lost almost 50 basis points.
The negative turn after lunchtime can mostly be attributed to softness in the energy sector, which shed nearly 1.7% in aggregate value. Optimism that OPEC can sustain its six-month drilling cap has been negated by a surprising rise in U.S. shale production. Accordingly, U.S. crude oil prices slipped $0.84 per-barrel for the day. Elsewhere, upward movement in the non-cyclical, industrial, and technology sectors worked to somewhat offset the aforementioned weakness. We suspect some sector rotation is at play, as well, with shareholders closing select positions after last week’s late rally.
The Dow set an all-time high in the first hour of trading, but saw its gains reduced into the afternoon. Still, strong performance from a duo of industry leaders kept the index safely in positive territory. Tech leader Apple (AAPL - Free Apple Stock Report) set a new year-long high, while aerospace giant Boeing (BA - Free Boeing Stock Report) advanced roughly 1.5%. After the closing bell, Walt Disney Company (DIS - Free Walt Disney Stock Report) will report its December period results. The shares were down slightly, as investors fear secular pressures in the cable business and tough box office comparisons in the year ahead could weigh on investor sentiment. Overall, the grouping continues to represent hope in the corporate world that the Trump Administration will usher in an era of business-friendly initiatives that will stoke historic growth.
Looking out to the remainder of the week, a slew of important quarterly releases ought to influence trading. Tomorrow will see Time Warner (TWX) headline the earnings roster, while Coca-Cola (KO - Free Coca-Cola Stock Report) and Kellogg (K) will update investors on Thursday. On Friday, the monthly consumer sentiment reading and factory order data will offer further clarity on the economy.
At the end of trading, declining shares outnumbered advancing issues by a 1.3-to-1 margin. The S&P 500, which moved along the breakeven line throughout the afternoon, finished the day slightly higher. The Dow and NASDAQ, though failing to return to morning highs, fought off the bear’s late-day campaign and registered advances of 38 and 11 points, respectively. – 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
Following an unprepossessing performance to start the new week on Wall Street yesterday, the bulls regrouped this morning and the stock market opened solidly to the upside. In fact, within minutes, the Dow Jones Industrial Average, a 19-point loser yesterday, was up by just over 100 points. Modest gains also were being secured by the other large-cap indexes, while slight improvement was the rule for the smaller-cap indexes. Boosting the Dow, which along with the NASDAQ has moved into record territory, is some good news on the earnings front.
Leading the way higher among the blue chips are shares of tech stalwart Apple (AAPL – Free Apple Stock Report). The stock, which hit a 52-week high this morning, and is within two points of a record, has been rallying since reporting strong revenue and earnings for the latest quarter. Also doing well is another Dow member, namely aerospace giant Boeing (BA – Free Boeing Stock Report). It also issued solid quarterly metrics earlier in the reporting period. That stock is up about $3.00 a share, or nearly 2%, thus far today. A third Dow component, Walt Disney (DIS – Free Disney Stock Report), which is yet to release results, will do so after the market closes today. DIS stock is off slightly so far today.
In total, nearly two-thirds of the companies in the S&P 500 Index have reported results for the fourth quarter, many of which have topped expectations. That is helping the market. Also helping keep the bears at bay are solid business fundamentals. In recent days, for example, we've received better-than-expected data on manufacturing activity, non-manufacturing, and job growth. The last of these reports led to a strong stock market rally this past Friday. These favorable corporate and economic results, meantime, have helped to counter some uncertainty in Washington.
Meanwhile, in other economic news, Philadelphia Federal Reserve President Patrick Harker this morning opined that a March interest rate hike by the Federal Reserve should be on the table. Although we had not taken that possibility off of the table, we still think the odds favor no such action next month. A rate hike at the subsequent meeting six weeks hence could be another story, though. The bond market barely budged on this news, suggesting that Wall Street also is doubtful. We think there is a bit less than a 50-50 chance of an interest rate adjustment next month.
Finally, breaking the market down as we move toward the noon hour in New York, we see that the Dow is weakening somewhat, but is still up 40 points; the S&P 500 index is ahead by two points; and the NASDAQ is in the win column by 22 points. Small gains, meantime, are being posted by the S&P Mid-Cap 400 and the small-cap Russell 2000. At the same time, winning stocks are ahead of losing issues on the Big Board by a modest margin, while about half of the 10 leading equity groups are still higher. A notable loser today, however, is energy on falling oil prices.
So as the afternoon approaches, the market is still ahead, but the gains are easing at this time. – Harvey S. Katz
At the time of this article's writing, the author had positions in AAPL and DIS.
Before the Bell
Wall Street opened up matters with little movement of note yesterday morning, as U.S. stocks drifted in and out of positive territory through the morning, and as we reached the noon hour on the East Coast, stocks were just incrementally to the downside. However, the market proceeded to weaken moderately as the afternoon began, and within an hour, or so, from that point, the leading averages were all in the minus column, with the Dow Jones Industrial Average losing about 40 points.
There was not much news to occupy traders, as economic releases were sparse and earnings reports were starting to slow down somewhat. So, the Street was looking for fresh catalysts. And there were few. Thus, stocks drifted lower, for the most part. But there were some stories to keep interest up. To wit, toy maker Hasbro (HAS) saw its shares hit a record high after its results beat expectations. That stock would wind up soaring by 14% on the day. At the same time, there was uncertainty over some of President Donald Trump's policies.
Conversely, stocks had rallied on Friday after the release of very positive economic data, most notably the report that the nation had added 227,000 jobs in January. That was above expectations and as wages rose just nominally, there were few fears of an inflation spike. But this rally did not carry over to yesterday, as investors, already becoming rather unsettled by some of the news out of Washington, seemed even more chagrined by suggestions of increasing isolationist policies.
The market then proceeded to mull about in modestly lower territory during the afternoon, and the averages did not revisit their morning lows. In fact, the aforementioned 40-point setback in the Dow at mid-session was about halved by the close. In all, that 30-stock index would surrender just 19 points on the day, remaining comfortably above 20,000 in the process. Elsewhere, the S&P 500 Index dropped five points, while the NASDAQ lost three points. The small-cap Russell 2000, however, was quite weak, dropping 11 points, or almost one percent.
Leading the way lower were the energy stocks, as the price of crude oil declined. The telecom group likewise weakened, but technology stocks managed to score small gains. Meanwhile, more than half of all companies have reported results for the latest quarter and, in general, the outcomes have been favorable. This has helped the stock market stay near record levels, but new highs have been more difficult to secure. Overall, it would seem that the catalysts to move stocks decidedly higher are still missing.
Now, looking out at a new day, we see that stocks were weaker in Asia overnight on global concerns, while the bourses are up solidly thus far in Europe this morning. As to other markets, bonds are mixed, but oil prices are lower once more. As to our futures, the early read is quite positive, as the Dow futures, for example, are ahead almost 70 points and the S&P futures are up some seven points in the early going, suggesting that the market should open solidly to the upside when trading resumes 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.
