After the Close
Equities pressed ahead this morning, weakened in the early afternoon, before rebounding sharply late in the session, and subsequently wilting again near the close. Of note, traders were taking their cue from Washington, where politicians are currently debating the nation’s healthcare system. At the close of the session, the Dow Jones Industrial Average was off 60 points; the broader S&P 500 Index was down two points; and the NASDAQ was up 11 points. Market breadth was slightly favorable, with advancers just ahead of decliners on the NYSE. The major market sectors were mixed. There was some weakness in the industrials and in the basic materials issues. In contrast, the utilities managed to advance, as these defensive high-yielding issues tend to do well when market conditions become uncertain.
Traders received just one notable economic release this morning. Specifically, durable goods orders rose 1.7% during the month of February, which was a little better than expectations. However, as mentioned, Wall Street has turned its attention to the political scene, as the Trump Administration works to pass its American Health Care Act, and replace the plan put in place by the Democrats. These developments are quite important, given the large role that the healthcare sector plays in the broader economy. On a related note, the President did sign off on a bill to commence construction of a major energy pipeline today.
Meanwhile, a number of corporations weighed in with their financial results over the past 24 hours. Specifically, shares of Micron (MU) moved up after the semiconductor giant posted strong results and provided upbeat guidance. However, shares of retailer GameStop (GME) sank on concerns about the business outlook.
Technically, stocks have been somewhat sluggish for the past couple of weeks. It should be noted that Wall Street may now be looking for some concrete progress from Washington, which has embraced a pro-business agenda. Further, it should be noted that stocks are now trading at elevated multiples, in our view, which leaves little room for disappointments or confusion. – 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 - 12:10 PM EDT
U.S. equity markets started off the day with a push to the upside, in a bid to erase some of this week’s losses. The major indexes shed about a percentage point each in the prior four sessions, making for their worst showing so far this year, with the Dow Jones Industrial Average notably extending its losing streak to six days. Stocks looked to be breaking out of their slump yesterday morning, but all their gains were erased after the scheduled vote on health care legislation was put off until today.
Earlier this morning, February’s durable goods report indicated a second-straight month of gains. Orders were up 1.7%, slightly ahead of expectations, and January’s increase was bumped up to 2.3%. However, all eyes are once again turned to Washington, as Congress heads for the late-afternoon vote on replacing the Affordable Care Act.
As we pass the noon hour of trading in New York, all three of the major indexes had lost some steam, but were still in the plus column. Market participants appeared encouraged by President Trump declaration that if the healthcare bill falters today, he would leave the current health law in place and move on to tax reform. By the numbers, the Dow Industrials were holding onto a 33 point gain, while the broader S&P 500 Index was ahead by eight. Nine of the 10 main market sectors were in the green, led by technology issues, with a gain of nearly three-quarters of a percentage point for the morning session. Accordingly, the tech-heavy NASDAQ was faring the best of the lot, with a gain of 38 points, or a little over half a percent.
Trading in the European bourses was a bit more mixed. A late-day rally pushed Germany’s DAX about a quarter percentage point into the green as the closing bell approached. Meanwhile, London’s FTSE managed to claw its way back to breakeven after spending most of the day in negative territory. The bears maintained a firmer hold in France, however, as the CAC-40 held modestly in the red. – Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before the Bell
Following mostly higher, but muted, sessions earlier in the day in Asia and Europe, and initially higher moves by U.S. futures, the stock market opened lower on our shores when trading went live on Thursday. However, the early moves were not sizable, and the S&P Mid-Cap 400 actually ticked higher from the outset. Not surprisingly, the sellers could not establish much momentum, and after the first few minutes of selling, the markets steadied at just slightly lower levels. As was the case on Tuesday and Wednesday, the focus was on Washington, as Congressional Republicans seemed to ready themselves for a vote on replacement of the Affordable Care Act.
Meanwhile, the selling eased off further as the session passed the half-hour mark in New York, with the S&P 400 and the Russell 2000 both going positive, while the large-cap indexes moved closer to breakeven as the first half hour passed. Then, we saw some surprisingly strong data on new home sales, with that metric coming in at an annual rate of 592,000 homes in February, up from a forecast level of 565,000 properties. That also was above the January sales tally of 558,000 homes. This gain more than offset a drop in sales of existing homes. That report was released by the National Association of Realtors on Wednesday.
That good news, aside, the market stayed stuck in neutral for the time being, with the smaller-cap indexes moving higher, while the large-cap composites remained mixed, with the Dow up and the NASDAQ down. Aside from the key averages, though, the market had a mixed tone, with a few more of the leading equity groups losing than gaining ground. More encouraging was the fact that almost twice as many stocks were higher as lower at the time. That often portends a better market as the day winds down--and yesterday appeared for most of the session to be no exception.
Indeed, this underlying strength was coming to the fore as the lunch hour neared in New York, with the Dow going nicely positive, while the NASDAQ's loss had dissipated. In all, the Dow was up by better than 70 points; the S&P 500 was keeping pace; and the NASDAQ was up a bit more grudgingly. But the small- and mid-cap areas were where the action was, with proportionately stronger gains, perhaps on speculation that the new health care package would pass the House on a scheduled vote later yesterday. The averages then strengthened further into the early afternoon, as the Dow's increase neared 100 points.
But progress was hard to make after that early afternoon spurt, and with uncertainty the rule in Washington regarding health care legislation, the market would go range bound for much of the afternoon. It seems as if the White House was still seeking a deal, while conservatives and moderates on the House Republican side were still balking for different reasons. The market then weakened over the final part of the afternoon, as the early strength gave way to new doubts about the health law revision's passage. The Dow's gain went by the wayside, in response, and a loss resurfaced, as it did with the S&P 500 and the NASDAQ.
Then came news that the scheduled vote on health care legislation had been put off until today. That news sent stocks into a late tailspin, which at the day's conclusion saw the Dow, the S&P 500 Index, and the NASDAQ all suffered small losses on the day. It was the sixth straight decline for the Dow. Now, of course, the focus will remain on Washington, so the ebb and flow of news from that quarter could elevate the level of volatility in the market. How the intended replacement vote on the Affordable Care Act progresses may tell much about where we are headed on Wall Street in the near term. For now, choppiness and volatility would seem likely to continue today.
Now, a new day dawns, and as we look overseas for direction, we see that stocks in Asia were higher overnight, while on the Continent, the European bourses are posting small losses thus far. Our futures, meantime, are headed slightly higher, along with Treasury yields. As noted above, the vote out of Congress later today will be the main driver as to how the stock market concludes this currently much lower week for equities. 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.
