After The Close
The stock market put in another turbulent performance today, as the Federal Reserve weighed in on the economy and delivered an interest-rate announcement. At the close of trading, the major averages were lower. The Dow Jones Industrial Average was down 45 points; the broader S&P 500 Index was down five points; and the NASDAQ was lower by 19 points. Nonetheless, some market sectors moved ahead, with sizable gains in the energy and basic materials issues. In contrast, select consumer stocks and the utilities lost some ground.
In economic news, existing home sales came in at 5.54 million units, annualized, during the month of February. This showing exceeded analyst expectations, and suggests that the housing market is still in decent shape. In the energy patch, the EIA announced that crude oil inventories shrank by 2.62 million barrels, during the latest reported week. Of note, supplies have moved lower over the past several months, and this may explain firmer energy prices. The price of crude oil was up about 3%, to over $65 a barrel, in New York today. Meanwhile, as noted, in the afternoon, the FOMC concluded its two-day meeting and announced a small interest-rate hike. Wall Street seemed somewhat rattled by the move, as stocks started heading lower in the afternoon, following an initial buying burst. By the end of the day, the situation had stabilized.
In the corporate sector, we heard from a couple of large names over the past 24 hours. Specifically, shares of General Mills (GIS) declined quite a bit today, as the food manufacturer put out guidance that failed to impress Wall Street. On a related note, many other companies in the food industry saw their share prices decline today, too. Meanwhile, shares of FedEx (FDX) moved up slightly after the transportation giant delivered solid results. By the close of the day the stock had lost its gains.
Technically, the stock market continues to trade in a choppy and directionless fashion. However, given the strength shown by the major averages over the past year, it is not unreasonable that there would be some consolidation at this point.
— 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
Wall Street began the second trading day of this week, and one session after a major downturn in the U.S. equity market, modestly to the upside. In all, the Dow Jones Industrial Average and the NASDAQ, respective 336-point and 138-point losers on Monday, ran ahead to early gains north of 150 points in the blue-chip composite and 35 points in the tech-laden NASDAQ yesterday morning. To be sure, not all the news was upbeat, as Facebook (FB), which had done much to energize the bears on Monday, as it was learned that some data irregularities had occurred there, fell further in early dealings, dropping another 5%, or so.
Overall, though, it was a positive start and a nice comeback for the bulls. The rebound, meantime, took hold as the Federal Reserve kicked off its two-day FOMC meeting, which will conclude later this afternoon on a snowy East Coast. In all, the lead bank is widely expected to raise its federal funds target by 25 basis points. It also is projected to follow that anticipated move with two to three additional rate hikes over the course of the year. This two-day confab also is the first in which new Fed Chair Jerome Powell will preside, and traders will be watching closely to see what, if any, changes will be visible from his predecessor Janet Yellen.
As to the market, after opening strongly higher, it moved further up the bullish ladder as we passed the first hour of trading. The advance then continued over the duration of the morning, with a session-best Dow gain of nearly 200 points. But the S&P 500 and the NASDAQ both were just grudgingly higher, while the Russell 2000 hit the noon hour a little below the breakeven line. All told, as the morning ended, there was an even split between gaining and losing sectors, while declining stocks held a modest plurality over winning issues on both the NYSE and the NASDAQ.
The steady, but hardly overwhelming, advance then largely continued into the afternoon, especially on the Dow, which retained about a 100-point gain as we entered the final two hours of trading. The big thing that investors presumably want to take out of today's Fed meeting is some sense regarding what the bank's plans are this year beyond this meeting. Expectations are that the lead bank will raise interest rates twice more in 2018. Should a more aggressive posture be adopted the market could head lower. Conversely, an increase in dovish sentiment could set the stage for a late rally today and beyond.
As for yesterday, the Dow's smart upturn was led by a solid advance in shares of aerospace and defense giant Boeing (BA – Free Boeing Stock Report). That issue had been under pressure recently due to fears about a possible trade war over imposed tariffs. Yesterday, however, such worries were clearly in the background as that stock rallied strongly. Overall, though, there was little excitement to the day, though the NASDAQ, more or less in the neutral zone in the morning rallied somewhat as the session wound down. For the most part, however, it was a dull, range-bound performance as the bulls and the bears awaited the aforementioned Mr. Powell.
All told, as the closing bell sounded and the Street readied itself for the arrival of yet one more storm during this increasingly difficult season for weather, we see that the Dow ended matters ahead by 116 points; the S&P 500 Index was better by four points; and the NASDAQ, after an undistinguished start, would wind up the session in the green by 20 points. Looking at the various equity sectors, advances were scored by six of the 10 major groups, with energy leading the way higher. However losing stocks retained leads on both the Big Board and the NASDAQ at the close of action.
Now, a new day dawns and in addition to the FOMC meeting's conclusion, we also will get data on sales of existing homes a bit later this morning. Ahead of all that, stocks in Asia were generally lower in the overnight hours, while in Europe, the early read on the markets is likewise to the downside. Also, oil, a gainer yesterday, is now passing hands this morning with further increases on Middle East tensions and yields on the 10-year Treasury note, which ended matters yesterday at 2.88% are now holding in there at 2.90%. Finally, our equity futures are suggesting a mixed open when trading resumes a little later this morning, with losses likely in the NASDAQ, as Facebook potentially faces more downside pressure once live trading resumes.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
