After the Close
Stocks pressed higher earlier today, but softened considerably in the afternoon on disappointing news out of Washington. At conclusion of trading, the Dow Jones Industrial Average was down five points, while the broader S&P 500 Index was off two points, and the NASDAQ was lower by four points. Market breadth was favorable, however, as advancers led decliners on the NYSE. From a sector perspective, the financials and many of the consumer names made progress, while the telecommunications issues and the utilities retreated.
Meantime, there were a few notable economic releases issued this morning. Specifically, new home sales rose to an annualized rate of 592,000 units during the month of February, which surpassed the consensus view. However, the labor market may be starting to slow. Of note, initial jobless claims edged up to 258,000 for the week of March 18th, where many economists had been expecting a lower reading. Tomorrow will be a light day for economic news, with just the latest monthly durable goods orders due out. Elsewhere, it should be mentioned that traders have been keeping an eye on Washington, as the Trump Administration tries to replace the Affordable Care Act with a new healthcare program. News late in the day that a scheduled vote on the new healthcare proposal by House Republicans has been delayed past tonight, set in motion the late pullback.
Meanwhile, a few corporations posted their results over the past 24 hours. Specifically, shares of PVH (PVH) traded higher after the apparel maker delivered solid results and provided encouraging guidance. Things did not go as well for ConAgra (CAG). That stock slipped, even though the food processor put out decent results. Of note, after the market closes, semiconductor leader Micron (MU) weighs in with its numbers.
Technically, stocks have been consolidating for the past couple of weeks. It remains to be seen if the bulls can regroup from here. For now, traders seem to be looking to Washington for clarity. They will also likely want to see corporations deliver solid results when the first-quarter earnings season starts up in the weeks ahead. – Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Mid-Day Update - 12:00 PM EDT
U.S. stocks opened lower on Thursday morning, as investors awaited results from the House of Representatives’ healthcare vote. But the market turned around an hour into trading, sending the three large-cap indexes into positive territory. The sentiment only brightened as the morning progressed, and was being buoyed by smaller issues, with the S&P Mid-Cap 400 and Small-Cap 600 adding to already wide gains as we pass midday.
Though the vote’s outcome will have direct impact on equities in the healthcare sector, the consequences of a rejected bill are much broader. Any delay in passing the Trump Administration’s bill would likely spell for a prolonged implementation of other initiatives, namely his tax plan. Reform has been a central tenet of the President’s platform since announcing his candidacy, and his election in November spurred a historic rally in the markets that has yet to see a sustained correction. So, should the bill fail to pass the House, we expect investors to react unfavorably.
Looking at the sectors, only the telecommunications segment failed to gain aggregate value during the morning hours. The nearly 4-to-1 edge held by advancing over declining stocks is being driven by the financial and cyclical consumer goods groups. The former has been one of the biggest beneficiaries in anticipation of President Trump’s announced policy, so a negative outcome on The Hill could quickly reverse what has been a largely positive morning at the Exchange.
In the past hour, the bulls accelerated their campaign, with the broad-based S&P 500 and blue chip Dow 30 performing equally well. The optimism continues to be propped up by mid- and small-cap equities. The Russell 2000, down big in the previous two days, was especially strong during the buying spree. Still, the weekly deficit remains wide for all of the indexes following Tuesday’s selloff. Also at risk should the healthcare bill be rejected by Congress are infrastructure spending and deregulation, adding further uncertainty into the recently stalled market. Accordingly, all eyes remain on Washington. – Robert Harrington
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before the Bell
The stock market opened mixed-to-lower yesterday morning, one day after suffering its biggest decline thus far in 2017. To wit, the Dow Jones Industrial Average, a 238-point loser on Tuesday, fell another 50 points quickly, while the S&P 500 Index eased as well. But the NASDAQ managed to stem the generally lower tide by gaining modestly a few minutes into the session. Things deteriorated a little more for the Dow, which was then off a bit over 70 points as we passed 30-minutes of trading. But the NASDAQ held strong, up 10 points at the half-hour mark.
The overriding problem was some loss of confidence in the Administration in Washington, where President Trump is attempting to steer an overhaul of the Affordable Care Act through (ACA) a so far reluctant Congress. The apparent fear is that a prolonged battle in Congress to repeal and replace the ACA could delay tax reform, deregulation, and some popular infrastructure spending measures. Expectations that all of these reforms would pass has underpinned the strong extension of the bull market since the November election. Now, some of that program, at least, looks to be doubt.
Things got somewhat worse for a time as the morning progressed, with the Dow falling further and the NASDAQ giving up its modest early gains. The small- and mid-cap indexes also continued to head lower. However, when a full-scale meltdown, such as we saw Tuesday, failed to develop, the buyers returned, albeit hesitantly. Thus, as the morning ended, the market had turned mixed, with the Dow off slightly, along with the small-cap Russell 2000 and the S&P Mid-Cap 400. However, the NASDAQ had turned solidly positive, while the S&P 500 Index was grudgingly in the black.
As to other news, oil has been up and down, while Treasury yields have eased back somewhat. In economic news, meanwhile, the National Association of Realtors reported yesterday morning that sales of existing homes had ticked lower on a month-to-month basis in February, while the year-to-year tally was still positive. Rising home values and inventory shortfalls appear to have been the keys to this sequential retracement. Overall, though, the sales report was credible. Indeed, once the inadequate inventory levels are overcome, sales should perk up.
The market then continued to mull about into the early afternoon, with the Dow, principally on weakness in apparel retailer NIKE (NKE – Free NIKE Stock Report), following less-than-compelling quarterly results, under some pressure. The small-and mid-cap indexes also were weak. Only the NASDAQ, on selective gains in technology, showed any sustained improvement. This pattern continued into the middle of the afternoon. It seems that Wall Street is marking time ahead of today's expected vote by the Republicans in Congress on the ACA repeal.
Meanwhile, this dull, directionless day continued through much of the afternoon, with the Dow holding in negative territory on weakness in NIKE, while most of other indexes were either flat or held small gains. Only the NASDAQ could be termed strong. Breaking the market down further, there was a split between gaining and losing groups, while more stocks remained lower on the Big Board and the NASDAQ than were gaining. The attack in London, meantime, seemed to have little impact on our markets at this time.
Stocks then firmed up a bit as we hit the close, with the Dow, in and out of positive territory during the final hour of trading, ending matters with a small loss of seven points. A modest increase, meantime, was tallied by the S&P 500 (up four points), with a more substantial gain being realized by the NASDAQ (ahead 28 points). The day ended in a suitable draw, with a consequent tie breaker, so to speak, likely evolving later in the week depending on the vote by the Republicans tomorrow. Expectations are for a close vote on the health care bill, which, if passed, would then go the Senate.
Finally looking out at the new day and the penultimate session of the week, we see that stocks were mostly higher in Asia overnight, while the major bourses are showing slight gains in Europe currently. Looking closer to home, our futures are up nominally so far; interest rates are also up negligibly; and oil prices are ticking higher, too. As was the case yesterday, meantime, all eyes will, for now, remain on the nation's Capitol. Stay tuned. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
